The average American has over $7,000 just in credit card debt. Ouch. Add to that student loans, car loans, medical debt and mortgages, and you’ve got a ton of stress and quite possibly a less than stellar credit score.
The average APR on credit cards is 15%. If you take a year to pay off $7,000 at 15%, that’s $581 in interest. That could be a vacation, a jumpstart to our investment portfolio, or a nice dinner out every month.
While the huge majority of us want to credit card debt relief, we’ve just come to accept it as a painful but necessary part of life. Everyone we know has it, but we generally don’t talk about it.
But what if you didn’t have to have credit card debt in your day-to-day life? It might seem like a strange idea by today’s standards, but there are many people out there who either don’t use credit cards or pay them off every month to avoid interest and fees.
How to Pay Down Credit Card Debt
No matter your income level, you need to get out from under that credit card debt, fast. The high interest rates and high credit-to-debt ratio will not only put a dent in your bank account, but it can hurt your credit score as well.
The only way to pay off credit card debt fast is to get organized and start with a plan of attack. Without clearly set goals, a good budget, and an overall idea of where you want to be, you’ll just end up in a credit card spiral again.
The smartest way to pay off credit cards is to learn how to stop overpsending and put a budget into place. You’ll be able to stop using credit cards to survive day-to-day and will be able to chip away at getting out of debt. Use these tips and tricks to learn the best way to pay off credit cards.
Looking to pay off your student loans? Learn how to organize and tackle those student loans once and for all!
Build a Credit Card payoff Plan
The best way to avoid the credit card spiral is to build a great credit card payoff plan. These are steps to put into place to ensure that you can not only get those cards paid off, but keep them that way.
1. Put down the card. Seriously.
Lock it up, throw away the key. If you don’t change your behavior, how can you possibly be able to stay out of credit card debt?
I’ve frozen mine before or tucked them away in our safe. If you have the numbers memorized (ahem, me), call and report them lost so you get a new one issued and tuck it away (yes, I’ve had to do this more than once!). Or cut them up so you’re not tempted. Whatever it takes to keep you on track.
Make sure to remove the temptation to use them by removing them from your daily life. That means clearing out your saved card numbers on your favorite shopping sites as well.
By taking away the ease of online shopping, we’re banking on the laziness factor to throw an automatic pause on shopping. No one wants to get up and dig through their wallet for their card (or chip it out of the ice block if you froze it!). This extra step takes your mind off auto pilot and can help you to stop and think about purchases before making them.
2. Budget and cut costs.
Even if you don’t want to hear it, budgeting is the key to successfully keeping control over your money. Without one, you’ll never know how much you have to put towards debt or anything else.
Now that you have a budget, you can easily see the top categories that you’re overspending in. I suggest starting with your top 3 categories where overspending occurs and seeing where you can trim to save additional costs.
Do you need to live bare bones? No, unless you want to. But figure out what’s important – and what’s not – and cut where it makes sense. There are a ton of easy places to cut costs: cell phone bill, insurance, groceries, and more.
Learn more about how we started saving $700 a month by cutting some basics from our budget here.
3. Set bi-weekly and monthly goals.
Set a SMART goal to get rid of credit card debt. Then, break that bigger goal into smaller ones. Two week mini goals are long enough to see progress without losing sight of your big goal – or worse, your motivation.
By setting goals, it creates a challenge and an end point in eliminating debt. This is a great way to stay motivated, especially when you know it’s not forever. It’s just for right now, and it’s for a manageable amount of time, making it easier to reduce debt fast.
4. Find an accountability partner.
Nothing forces you to stay on course like having an accountability partner. The awkwardness of admitting that I didn’t follow through on something is truly more than I can bear. Having an accountability partner really forces you to not only be honest with them, but with yourself as well. You’re forced to set goals and actually follow through.
And who knows? You might be motivating them in return to reduce credit card debt or stop paying everything with credit cards. It’s a win-win!
How to Pay Off Credit Card Debt Faster
In order to stop the financial hemorrhaging, you need to staunch the flow as quickly as possible, right? One of the best ways to do this, besides locking up your cards, is to minimize any additional costs such as fees and interest:
1. Automate your payments.
Don’t be a sucker and end up paying late fees because you forgot to schedule your monthly payment. Create an automated payment that is at the very least your minimize payment due. Then you can create additional payments for any excess income you have in your budget.
2. Call for a lower interest rate.
You have about a 50/50 chance of this working, but it can save you a ton. Give it a shot, it’s worth the 20 minutes of your time.
Remember the scenario above where I mentioned $7,000 in credit card debt at 15% APR, paid off over a year? A drop of just 2% of interest would save about $80 over the year. While it might not seem like much, that’s $80 less dollars that you have to earn, scrape together, or save in order to get out of credit card debt.
3. Ask for yearly fees to be waived.
If you can’t get them to drop your interest rate, ask for any yearly fees to be waived. Point out that you’ve always paid on time and over the minimum balance (if that applies). Reminding them that you’re a great customer might help grease the wheels.
4. Can’t get a lower APR or drop fees? Try switching cards.
Credit card companies have multiple cards. Ask your credit card company if they have a different card available that has lower rates and fees that better fits your situation.
5. Consider transferring your debt.
I don’t suggest this option lightly. I would only recommend doing this if you have a great credit score. Otherwise, the transfer fee could potentially negate any savings you would have made on not having to pay interest. Make sure to read the fine print on any offers!
Consider moving your credit card debt to new zero percent interest card. Remember that these cards generally have a transfer rate associated with them, usually around 3-5%. And, if you don’t pay off the amount in time, you’ll end up paying back all of that interest.
Make sure that the transfer rate is less than what you’d pay in interest over your payment time period. Check out this pay off credit card calculator to see how much you’d end up paying in interest with your current card.
While I’m not a big fan of shuffling debt around, if you’re responsible and can handle it without charging more, it could be key to the fastest way to pay off credit card.
Disclaimer: if you go this route, you absolutely must:
- Pay off the new card before that 0% interest kicks in.
- Put both cards in the safe, a block of ice, or even better – the shredder. Don’t take on any new debt!
You can also try a personal loan. Some have insanely low rates, but you have to do your research and consider any fees and additional expenses. Choose wisely if you decide to go this route, and again, make sure to put those credit cards away so that you avoid the temptation to spend on them again.
Creative Ways to Pay Off Debt
Now that you’ve created a plan and you’ve slowed your roll (as the kids say) on additional costs, it’s time to get creative.
Wondering how to pay off credit card debt faster? There are tons of creative ways to pay off credit card debt outside of picking up a side hustle or working additional hours. The best way to eliminate debt is to throw more money at it!
Use those credit card points.
It’s time to cash in those credit card points. Rather than cash, opt for gift cards that you can use for groceries to trim your grocery budget. Then take that excess and pay off credit card debt.
Use awesome apps like Trim to cut costs.
I have a full review on Trim here, but here’s the quick synopsis. Trim is an app that helps you:
- Keep an eye on your money by sending you texts about transactions in your account.
- Automatically find the best deals on your existing services like cell phones, cable and internet.
- Flag subscriptions that you’re paying for to make sure you’re aware of them.
Trim’s a great way to catch any excess cash that’s leaking out of your account, whether it be through overpaying for services or continuing to pay on a forgotten membership. You can read all about how we saved $240 in just five minutes by using Trim.
Use Paribus to catch better deals on items already purchased.
Paribus is great for monitoring your purchases and making sure that you’re getting the best deal. A totally free service that keeps track of your purchases, and if it finds it at a better price, it automatically submits a claim to the store on your behalf to get the refund.
If you’re making purchases anyway, this is an easy way to get the best price without all the hassle. Take that extra savings and use it to make additional payments towards your credit card.
Sell your unwanted stuff.
We all have stuff laying around the house that we need to get rid of. It’s the perfect way to make some extra cash to pay towards your credit card as well as clean out your clutter. There are tons of great sites and apps to use, including:
- Facebook Marketplace
Don’t forget yard sales, consignment shops, and local consignment events. There are a ton of places to get rid of stuff, it’s just finding the best platform for your the type of stuff you have. For example, kids clothes sell really well in lots on eBay or local consignment events.
Join Fiverr to earn cash with your skills.
Fiverr is a job site where you can use your skills to make some extra cash. You set the pricing for yourself and decide what types of jobs you’ll accept. Fiverr has over 100 job categories, so it’s sure to have some way for you to make extra income to pay off your credit cards.
Some examples include: voiceover work, web design and development, graphic design, music and writing. The best part? There’s no billing a client afterwards, waiting around for them to pay. You are paid by Fiverr immediately after the job is done, so no wasting time chasing down delinquent clients to try and get them to pay.
Use survey sites like Swagbucks in your spare time.
You’re not going to become a millionaire working your way through online surveys, but Swagbucks is a great way to pick up extra cash if you don’t have enough time or resources to pick up a side gig.
Swagbucks includes different activities besides surveys. You can watch videos, play games, and get cash back on purchases as well. It’s perfect for when you’re binging some Netflix after work or have some spare time waiting to pick up your kids.
Try a savings challenge to kick start your debt payoff.
Here’s a list of 37 different savings challenges to shake things up and start off your debt repayment right. There are a wide variety of challenges, including weekly cash savings challenges to having a free family weekend.
My favorite is to do a no spend challenge. You choose a week or month to stop spending so that you can save up to eliminate debt. Think of it as a fast or cleanse, but for your finances. It’s a great way to jump start your debt payoff!
Pick up a side hustle to make extra cash.
There’s nothing short of a billion different side hustles you can do – from DoorDash to selling on Etsy and everything in between, you can find a side hustle that will fit your needs and availability. Learn more about side hustles here:
- The Ultimate List of Legit Side Hustles for 2019
- How to Make Money Online: 50+ Brilliant Ways to Make Side Money Now
Use Raise.com to save cash on purchases.
Raise.com offers gift cards that are discounted by up to 30%! Raise.com is an awesome website where users can sell their old gift cards at the price that they set. They can be discounted up to 30% by the seller. On top of that, Raise.com runs specials that discount some cards even further.
Now that you know how to pay off credit cards quickly, it’s important to be consistent and find ways to remind yourself of your goals so that you stay on track. Figure out what methods work best for you, and get to it!
Looking for more ways to squeeze a tight budget? Read up on 11 simple ways to save money on a tight budget.
Printable Debt & Savings Trackers Just for You!
Use these free debt & savings tracking printables to help you track and achieve all of your financial goals!