10 Best Ways to Pay Off Credit Card Debt Fast
In this post, I will teach you the best way to pay off credit card debt fast. It has been discovered by financial institutions in the United States, that Households having credit card debts usually owe about $15,355 on their credit cards.
When you calculate how long it will take to repay that amount at 18 per cent on the least repayment term of 3 per cent, you will discover that it will take about 23 years to pay off the debt. And that means almost double the principal debt or about $30,408.18. I know you wouldn’t want a huge debt on your neck and would like to avoid paying two times for what you bought.
Also, if you have debt, it may be hard for you to get a mortgage loan. So, below are steps and strategies you can use to pay off your debts. They are the best way to pay off credit card debt fast. Let us dive in right away.
Best way to pay off credit card debt fast
Below are the best ways to pay off your credit card debts faster:
1. Stop using your cards
If you buy things on impulse, the best way to stop you is to make sure you keep your credit cards at home when you go out. But if your debt came due to a sudden turn of bad events, then you can hold on to your cards.
Moreover, if you close your credit card account it will damage your credit ratings especially if your account is old or have a high credit limit. So you can keep your card but don’t go around with it.
2. Ask for a debt consolidation loan
The next strategy you can use in this list of the best way to pay off credit card debt fast is debt consolidation and refinancing. You can look out for financial services to give you a personal loan at minimal interest rates.
But, if you get a new loan with a small interest rate that takes longer to repay, you will be paying more interest.
But, if you get a loan with a lower interest rate than the average of the balances it can pay off with fees, and you have a clear repayment schedule, you can pay off the loan faster.
3. Get a credit card with no balance for normal purchase
How it works is that when you use a credit card that has a balance on it, you pay interest on the day you buy anything with the card.
But when you charge normal things you buy on a credit card and pay once at month-end, it is better. Paying at month-end will help you avoid new interest charges. Also, you can use the amount you save as a result, to reduce the debt. So if you don’t have this type of credit card try and get it.
4. Budget more for debt repayment
One other best way to pay off credit card debt fast is to make a budget for debt repayment that is as large as you can handle. For instance, you can use the money you usually set aside for emergencies for debt repayment. This will enable you to reduce the interest rate payable by that amount. And if you get an emergency, you can find other creative ways to raise money for it.
5. Reduce expenses and allocate more to debt repayment
This method is the best way to pay off credit card debt fast. Reduce your expenses and use the amount you save to pay down your credit card debt. Find the best ways to reduce your usual monthly expenses and you will achieve it.
6. Make additional payments by using new money
You can look for additional money to pay down your credit debt. For instance, you can choose to work overtime once in a week. In this way, you will be able to earn extra income that will add up in one year. Also, you should use any income that you receive unexpectedly like tax refunds or monetary gifts from family or friends to reduce the credit card indebtedness. Besides, with the internet at your disposal, you can organize garage sales to sell off things that you don’t use to raise money fast.
8. Ask for lower interest rates
Find a way to ask your credit card company to reduce the interest rate. At least meet your creditor to ask for a reduction once for all the credit cards you have.
For example, if you are able to get a reduction of interest rate on a debt of $5,000 from 18 per cent to 13 per cent, you will save a huge amount annually. You can then apply for savings to pay down your credit card debt.
9. Pay debts with the highest interest rates first
Another best way to pay off credit card debt fast is to pay the minimum amount on each card. And then pay more on the card with the highest interest rate. If you do this, you will soon pay off the debt. Now use this same method to pay down the next card you have with the highest interest rate.
What this strategy focuses on is paying off the debt rather than paying more money on interest. As you do this, you increase the speed at which you pay off your credit card debts.
The exception to this rule is when all your cards have balances.
If this is the case, pay off the card with the smallest balance first so that you now have one card you can use for ordinary purchases. And, avoid new interest charges to this card by paying for the card in full every month.
9. Make two payments each month
You should be aware that most credit card companies use the average daily balance to calculate interest charges. For example, instead of paying USD$200 to reduce a balance each month, make two payments of USD$100 each. The effect on your daily balance is that it will become lower and that means you will pay less interest. And if you can pay weekly it will even be better for your credit card debt.
10. Transfer debt to zero interest cards
The last strategy in this list of the best way to pay off credit card debt fast is to transfer the debt to zero interest cards. If you transfer most of your debt to a card with a lower interest rate, this will help you to make repayment easily.
This could happen if you can see a card that does not have a transfer fee, and no interest charges for one year or even more. So try to pay off the whole debt during the zero interest periods. But if you fail to do so, look out for other offers with zero interest when the present one expires.