The Best Way to Pay Off Credit Card Debt Quickly

How to Pay Off Credit Card Debt Fast

Statistics show that nearly half of all Americans have credit card debt from month to month, and the average credit card debt amount in an American household is almost $8,000. So, while you certainly aren’t alone in accumulating debt on your credit card bill each month, there are significant benefits to paying it off as soon as possible.

If you are wondering how to pay off credit card debt, there are various strategies you can pursue to become debt-free and achieve financial stability. With our reputable and accessible personal loans, Tower Loan can offer you one of the quickest ways to pay off credit card debt.

What Is Credit Card Debt?  

Credit card debt is money owed after someone makes a purchase and pays less than the total amount on a credit card. It is a form of unsecured liability that allows you to borrow money through your credit card account and pay it back later.

Many people view credit card debt as the outstanding balance on their credit card that carries over from the previous month. This type of debt allows borrowers to make purchases with deferred payments over time as long as they pay the monthly interest charges.

With this form of revolving credit, you have the option to pay off balances to avoid high interest fees and take advantage of reward programs for cash back. Credit card companies report debt balances and credit activity to credit bureaus each month, so how you make credit card payments can significantly affect your credit score and credit utilization ratio.

Why and How to Pay Off Credit Dard Debt

There are many benefits to paying off your credit card debt, such as improving your credit score and keeping your credit utilization rate low. You’ll avoid paying extra money in interest fees if you can pay your full balance each month, thereby saving you money in the long run.

To get a handle on your monthly payments, consider trying one or more of these approaches to find the best way to pay off credit card debt.

1. Rethink Your Budget

Before fully exploring how to pay off credit card debt, take a step back and examine your budget. If you haven’t established a written budget detailing your monthly income and expenses, this oversight could be the root of the problem.

Keep a detailed spreadsheet or journal about your monthly spending patterns, fixed bills, discretionary spending, and all your debts. By reworking your budget, you may discover that you are able to pay off all or at least more of your credit card bills than you initially expected.

2. Change Your Spending Habits

Along with the idea of rethinking your budget, it is also smart to reassess your spending habits as part of your strategy on how to pay off credit card quickly.

Consider using cash instead of accumulating additional debt on your credit card, avoid impulse purchases, and prioritize grocery shopping and meal planning over frequent dining out. Hold yourself accountable for your daily spending and write down some financial goals to stay focused on what you truly want and need.

3. Pay More Than the Minimum Monthly Payments

As a general rule, try to make more than the minimum payments on all your credit cards each month. If you only pay the minimum, paying off your entire bill will take a long time, and you’ll accrue more interest over time.

When considering how to pay off credit card debt fast, remember that every dollar over the minimum payment you make means less interest you have to pay.

4. Focus on One Debt at a Time

Juggling multiple debts at once can be a challenge, so simplify your financial goals and focus on paying down the balance of just one card at a time. This is an effective strategy if you have a balance on multiple credit cards.

Although you should always pay at least the minimum on every card you have, you can focus the most on paying down your credit card with the highest interest rate. This way, you will save on interest fees over time. Alternatively, you can work on paying off credit card debt by paying off the card with the smallest balance first to get that one out of the way before moving on to the other larger accounts.

5. Consolidate Your Credit Card Debt

Another option for the best way to pay off credit card debt is to consolidate several balances into one account with a lower rate. This strategy simplifies your monthly bills and can help you pay your debt faster without having to make larger payments.

You can consolidate debt by taking out a home equity line of credit or moving debt away from high-interest credit cards with a low balance transfer rate. You will need to compare the balance transfer fees (typically three to five percent) to the savings you would see from a lower monthly interest rate.

Also, consider taking out a personal debt consolidation loan to receive a lump sum of money that you can use to pay off credit cards with high interest rates. Personal loans usually have lower interest rates than credit cards, so once you pay off your credit card debt, you’ll owe less in interest by just paying off your personal loan.

6. Discuss Your Situation with Your Credit Card Company  

Many borrowers in debt are intimidated by credit card companies, but many providers are willing to work with you during times of financial hardship. If you are having trouble making your payments, contact your credit card company to explain your situation and see what they can do for you.

A creditor may be willing to postpone payments, offer a reduced interest rate, or agree to a repayment plan that is better for your budget. However, be prepared to provide financial details about your other debts and income to qualify for special considerations.

Top Strategies for Paying Off Credit Card Debt

Financial advisors often recommend one of three common approaches for how to pay off a credit card quickly. The following three strategies are tried-and-true methods that have helped many people reduce their credit card debt.

Avalanche Strategy

The avalanche strategy focuses on paying high-interest debt first to make a significant initial impact on your debt. Meanwhile, you make minimum payments on your other accounts while focusing on the largest one.

Pros:

• You can save on interest fees.
• It’s a logical approach that appeals to many people.

Cons:

• It can take a long time to eliminate that first large debt.
• It may be discouraging without “quick success” in reducing your debt.

Snowball Strategy

In contrast, your strategy for how to pay off credit card quickly might start with your smallest debt and “snowball” up from there. The snowball strategy involves paying your smallest debts first to get those out of the way before tackling the larger ones.

Pros:

• You’ll see quick progress on your debt goals.
• You may feel less overwhelmed by many outstanding balances at once.

Cons:

• You’ll still be paying the highest interest rates on your largest debts.
• You may pay more in interest over the long term.

Consolidation Strategy

Consolidation is also an option for how to pay off credit card debt fast. This strategy involves transferring your credit card debt to a personal loan or balance transfer card to get lower interest rates and just one monthly payment to worry about.

Pros:

• There’s just one payment to worry about without over-strategizing.
• You may have lower interest rates than your original credit card.

Cons:

• You must meet a lender’s eligibility requirements to qualify for a loan.
• Watch for other fees that apply for the benefit of consolidation.  

How Tower Loan Can Assist You with Paying Off Credit Card Debt

The best way to pay off credit card debt will vary from one person to the next based on unique financial circumstances. Choosing a method that makes sense to you and that you can commit to is important.

Once you fully pay off a credit card, you have the option of closing it out. However, you might want to leave it open anyway and just not use it because canceling a long-term card can negatively impact your credit score.

If getting a personal loan fits with your decision about how to pay off credit card debt fast, Tower Loan can help. Many people come to us for debt consolidation loans, and we have offices in six states and over 240 cities to assist you.

Among the benefits of taking out a personal loan to handle credit card debt are predictable monthly payments, reasonable interest rates, and a fast application process. Our loans are flexible and provide you with a quick influx of cash that you can use to pay off credit card debt in any way you choose.

To see what you qualify for, apply online today or browse our FAQ page to learn more about how personal loans work. We are here to help you get out of credit card debt in Alabama, Illinois, Louisiana, Mississippi, Missouri, and Texas.