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How to Pay Off Credit Card Debt

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How to Pay Off Credit Card Debt

Burgeoning credit card balances can cause a person plenty of anxiety, so if you’re staring at one every month, you’re probably wondering how to pay off credit card debt — or, perhaps, more pointedly, how to pay off credit card debt fast. While there aren’t too many instant-fixes — outside of, you know, a major windfall — there are steps you can take to minimize the damage and ultimately knock out your credit card debt once and for all. These tips can help you move from debt-stressed to debt-free.

Start With a Credit Reality Check

It can be tempting to ignore credit card balances the second they get too big and just start mindlessly making minimum payments. However, there are dire consequences associated with that strategy. For starters, credit card interest adds up fast. Most credit card issuers require a minimum payment of 1% to 2% of your balance. So let’s assume, for example, you owe $6,000 on a credit card with a 15% annual percentage rate (APR) and your issuer requires 2% of that balance as a minimum payment. You’d wind up paying close to around $9,184 in interest, were you to only make that $120 minimum for the full 355 months it would take to pay that $6,000 balance down. (To help you come up with a better plan, you can use our credit card debt calculator.)

Plus, mega-interest aside, those credit card balances are weighing down more than your wallet. They may be dragging down your credit scores, too. (If you want to see how your debt is affecting your credit, you can view two of your credit scores for free on Credit.com. They’re updated every 14 days so you can monitor your score as you pay down debt.)

To reverse course quickly, consider these strategies for how to pay down credit card debt instead.

1. Pay Off the Smallest Balance First

If you have several credit cards with various balances, this might be the way to go. Take the account with the smallest balance and pay double, triple monthly payments, whatever you can afford each month, all while continuing to make the minimum payment on your other credit cards.

Once that smallest balance is knocked down to zero, move on to the card with the next lowest balance. This pay-off strategy gives you the great satisfaction of seeing a card balance flip to zero early on in your pay-off plan. Once one is down to zero, then two, you’ll be motivated to keep going until all those balances read zero.

2. Pay Down the Card With the Highest Interest Rate

Are you sick of the money that is being sucked away by the finance charges on your credit cards? And are you looking for a no-nonsense and effective way to slash your debt? Then zero in on the credit card with the highest interest rate first and focus your payments there.

Pay double or triple your minimum payments on the card with the highest interest rate and most costly monthly finances charges, while continuing to make the minimum payments on your other credit cards. This strategy is the most efficient way to attack your debt, but it takes discipline to stick with it, especially if the card with the highest interest rate has a pretty hefty balance. Once you pay off the card with the highest interest rate, move on to the card with the next highest interest rate and so on.

Choose a payment strategy that works for you and stick with it. You may even adopt a combination approach. Maybe the card with the highest interest rate also has the lowest balance. So you’ll get double satisfaction that comes with attacking the card with the highest APR and seeing a smaller balance flip to zero pretty early on in your this-debt-must-go plan.

3. Consider a Balance-Transfer Credit Card

Many credit card issuers offer 0% introductory APRs to customers who transfer a balance over to their card from another. That 0% APR will expire eventually — usually within 6 to 12 months, though some of the better balance transfer credit cards last as long as 18 to 21 months — and most offers involve a fee (typically 2% to 3% of the balance you’re carrying.) However, for someone carrying a high-interest credit card, the right balance transfer card can be a real lifesaver.

Just remember to read the fine print of any balance-transfer offer you are considering carefully  — and refrain from running up any new charges on the card. The aim should be to pay the balance off before the introductory APR period expires and that can get a whole lot harder if you’re adding to the balance. When assessing balance transfer credit cards be sure to note:

  • How long the introductory 0% APR lasts for
  • Whether that APR applies to purchases, too, and not just balance transfers
  • What the go-to APR on balances transfers and purchases will be once the introductory rate expires
  • The fee associated with transferring the balance

Finally, while the best balance-transfer credit cards refrain from charging retroactive interest, some cards touting deferred-interest financing, particularly store credit cards, will require you to pay interest on the full balance you transferred if you can’t pay it all down before the 0% introductory APR offer expires. So, again, you’ll want to comparison-shop for the best offers by reading their terms and conditions closely and be realistic about how long you think it will take you to pay the card off.

4. Look Into a Personal Loan

You can also consider taking out a personal loan to pay off all of your credit card balances. These personal loans — sometimes, referred to as debt consolidation loans — can be a good option for someone who doesn’t trust themselves to not continually run their credit card balances up. See, personal loans are installment loans — borrowers agree to make a set monthly payment at a certain interest rate for a specific period of time. That means, in taking out the loan and using it to pay off your credit card debt, you’re given yourself a hard date in which that debt will be completely off the books.

On the flip side, you’re locking yourself into a set monthly payment — you can’t make a minimum payment like you can on a credit card if you get in a jam. Plus, interest rates on personal loans are primarily determined by your credit scores, meaning you may or may not qualify for a lower rate than the one you’re already paying. Again, here it helps to read all offers carefully and do some research on lenders ahead of time. To summarize, when vetting personal loans look into:

  • Whether the APR you can qualify for will be lower than the one your credit card(s) are carrying
  • The length of time you’ll be paying the loan back
  • Whether the monthly payment fits into your budget
  • Whether there are any penalty fees associated with paying the loan back early

Remember: The last thing you want to do after using a personal loan to pay off your credit card debt is to run those balances up again. Otherwise, you’ll wind up with more debt than you started with. If you go this route, it might be a good idea to hide your plastic while you’re paying off your personal loan.

Additional reporting was contributed by Lucy Lazarony.


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  • http://www.Credit.com/ Gerri Detweiler

    Paying them off won’t help your credit scores in most cases, but if you don’t pay them you’ll most certainly hear from debt collectors. This article may help: What Happens If I Don’t Pay My Credit Card Bill?

  • http://www.credit.com/ Credit.com Credit Experts

    Paying them off more quickly than agreed might not help your scores — unless it also helps you reduce the amount of your overall available credit that you’re using. You want to aim to use no more than 30% of your limit (less than 10% is even better). Credit.com has a tool that shows you how much of your credit you’re using, and offers a plan to show you how various actions on your part are likely to affect your score. You’ll find it here: http://www.credit.com/how-it-works/?utm

  • Guest1

    Well, patricia, you’re right. If you pay them off while they are closed, you have the option to reapply for one of your credit accounts.

  • postal_blonde

    I found paying them off did help and making sure you pay everything on time. Not always will it drop off in 7 yrs ….If they attempt to collect from you 6yr and 360 days, it starts that 7 yrs all over again. I paid what i could until they were clear. It shows you are trying.

  • South Dakota

    Thank you for saying that it’s ok to pay the card with the lowest balance first. I find that the satisfaction of paying off a balance is motivation to work on the next bill!

    • http://www.credit.com/ Credit.com Credit Experts

      Different things work for different people — but staying motivated is key! It’s important to find a way that works for you.

  • http://www.Credit.com/ Gerri Detweiler

    Congratulations! No, it won’t hurt at all to pay them off right away. Just don’t close the accounts. Leave them open if possible. Are you monitoring your scores? I’d love to hear what happens to your scores before and after. You can free credit score here.

    • HBgoldie

      Hello,
      I have many doctor bills that I can not pay. I am disabled and have ben thinking of applying for bankruptcy? Is this a bad idea?

      • http://www.credit.com/ Credit.com Credit Experts

        Why don’t you talk with a bankruptcy attorney to get his or her opinion? Consultations are usually free or very inexpensive.

  • Larry

    pay it off by getting a second job – make more money somehow.

  • http://www.Credit.com/ Gerri Detweiler

    It sounds like they cancelled $9000 of your debt. If so, they must file a 1099-c for that amount. It doesn’t really matter whether you agreed in writing or not. You may not be responsible for taxes if you qualify for the insolvency exclusion. We’ve written extensively about that. Read more here: 1099-C In the Mail? How to Avoid Taxes on Cancelled Debt

  • http://www.Credit.com/ Gerri Detweiler

    Have you tried to see whether you qualify for the insolvency exclusion?

  • al

    No if you really can’t afford it your credit rating is bad then don’t. It happen to me many years ago I was broke due to family health problems and could not pay. You come first and your family, because those banks will not be the first to give you a hand and help you out.

  • http://www.credit.com/ Credit.com Credit Experts

    The debt can be reported for 7.5 years after it first went late, assuming no activity on the account (and selling it to another debt collection agency is not considered activity). But differing deadlines and limitations can be confusing. See: Does Your Old Debt Have an Expiration Date?

    • Paul

      To be exact; the debt will not reload unless you agree to pay even a dime…then the 7 years would reset, so just tell the scumbags to…!

      Also; 7 year old debt can actually be removed at 6 years and 9 months, but you have to contact all three credit bureaus and request the files/information be removed.

      • http://www.Credit.com/ Gerri Detweiler

        Just to clarify, making a payment restarts the statute of limitations but it does not extend the amount of time an item can be reported under the FCRA.

  • fran

    I agree I made the debt and I should pay But do you know how many times I have to fight to get them to pay the amount I could and
    they would not work with me the Bill was to a Doctor who I never seen he was part of a group for my sleep problems I stop breathing in the middle of night 30 times I have Had 2 strokes and a lot of Mimi strokes the bill to him to decide how much air I needed. Bill $435 dollars never mind the 2530.00 for the 11 hrs. there. after insurance I owed him 268.00 and the other 500.00 because of my deductible they work with me they wanted 100.00 a moth to pay him and other Medical bills I was still paying on. I said I could pay 50.00 a Mo and as soon as one of my other bills of 30.00 a moth was paid off I would add it to the one I owed 500.00 then I call the doctors office said I could only pay 50.00 and that was going to be a tight for me they also wanted 100.00 a Mo they finally after 2 weeks and 10 phone calls from me they agreed. I made 2 payments on time to him which made it 168.00 I had another stroke did not make that payment that Mo because in Hospital. sometimes it takes a week or so to get your mind working on all the things you need to think about they sent no letter saying your payment is past due please call or we have tried to reach you .I called them and said I would not get the payment to them on time it would be a week late and was told that 4 days after they did not get my payment they turned it into collection . I explained what had happened and that the place I had owed 500.00 to said don’t worry about the payment you missed nor the one coming up this mouth .stat next Mo with you regular 50.00 payment well this help you get on you feet some I said yes and thanked them very much for being so understanding. I told the Doctors office that had they had waited I could have given them 100.00 that mo. So not all places work for you or with you they would have gotten there money.in Full . like I promised. In my Book places who work with me get top of list when paying the back as soon as possible.

  • justme

    thank you for the information!

  • Lisa Brains

    Yes, you should pay them off because they will continue to ruin your credit. You may want to talk with a local free credit counselor who can help you arrange manageable payments and even have some fees removed. Most collectors want to atleast make a profit on your debt so at least try to negotiate.

    • http://www.Credit.com/ Gerri Detweiler

      If you don’t pay the balances may grow and you may be sued. It sounds like these debts aren’t too old to be collected, so you may want to resolve it.

  • Delores

    I had a credit card with a high balcnce of 12,158.0 with an apr of 1999 %. the credit company will not reduce by interest rate. My payment is 250.00 which only $21.00 is applied to principal. It would take me 50 years to payoff this balance. I enrolled into a credit program which will negotiate with the credit card company to pay $8000.00.. Will the credit card company come after me for the difference . I have 90 days to cancel the program.

    • http://www.Credit.com/ Gerri Detweiler

      Delores – I am not sure what program you are enrolled in but it sounds like a debt settlement program. Settlement can work but there is no guarantee the card issuer will settle for that amount. You may want to get a second opinion from a reputable counseling agency. We’ve written about credit counseling here: Does Credit Counseling Work?

  • http://www.credit.com/ Credit.com Credit Experts

    A zero balance is likely to help, especially if your credit utilization (balance relative to credit limit) has been high. But be cautious about closing an account; that can actually result in a lower score. You can read more here:
    Does Closing Your Credit Card Account Affect Your Credit Score?

  • mary

    Yes sir,or get a settlement with the credit cards companies or if it’s in collecting try and ask for a settlement.

  • Adam TurboChicken Gracy

    I highly doubt she was asking if she should pay for it or not. She was probably asking if it was still payable and able to be removed from her credit report.


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