5 Effective Strategies to Pay Off Credit Card Debt

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Credit card debt is tough to manage, but a good repayment strategy can help.

Anyone who has had credit card debt knows that it's no picnic. You do your best to chip away at it, only to see new bills and interest charges slow down your progress.

Fortunately, there are several strategies that make it easier to pay off credit card debt. The right one can keep you motivated, save you money on interest, and get you out of debt sooner.

Remember that for any of these strategies to be effective, you need to avoid adding to your debt and put as much disposable income as possible towards it.

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1. Debt snowball

The debt snowball involves paying off credit cards with the smallest balances first. Let's say you have four credit cards with the following balances:

  • $250
  • $700
  • $1,000
  • $2,300

You'd start by making minimum payments on the cards with the three biggest balances and putting the rest of your disposable income towards the card with the $250 balance. Once you had that card paid off, you'd repeat the process with the next smallest balance, and so on.

This is a popular debt repayment method because paying off a debt is both a nice reward and an incentive to keep going. It works especially well if all your credit cards have similar interest rates.

2. Debt avalanche

The debt avalanche involves paying off credit cards with the highest interest rates first. You'd make minimum payments on every card except the one with the highest APR, where you'd pay as much as possible.

This method is a good choice if your credit cards have much different interest rates, because it will save you the most money. For example, if you have any 0% APR credit cards, it would make sense to save those for last and focus on the cards where you're being charged interest.

3. A debt payoff app

There are several highly rated debt payoff apps available for Apple and Android devices. Here are a few examples:

  • Debt Payoff Planner lets you enter your debts and your monthly payment amount. It then provides payment plan options and shows which one saves the most money.
  • Qoins rounds up your transactions and uses the money for an extra monthly debt payment.
  • Digit figures out an amount you can save from your income and spending habits, and then it automatically saves the money for you.

Some (but not all) apps have small monthly fees. If you find an app you like, it could be exactly what you need to take control of your credit card debt.

4. A balance transfer

A balance transfer is when you move a balance from one credit card to another. It allows you to save on interest charges if the new credit card has a lower interest rate than the original.

There are balance transfer cards with 0% APRs specifically for refinancing credit card debt. If you open one of these cards, you can transfer over your credit card debt and pay it down interest free during the 0% APR period. Depending on the card, this introductory period can last for 12 months or longer.

This type of credit card can save you quite a bit of money, but there are a few things you should know first:

  • You usually need good credit, meaning a FICO® Score of at least 670, to qualify for a balance transfer card.
  • Most cards charge a balance transfer fee between 3% and 5%.
  • The total amount transferred, plus the balance transfer fee, can't exceed the card's credit limit. Some balance transfer cards also have separate transfer limits.

5. A debt consolidation loan

Debt consolidation loans are a type of personal loan for paying off debt. After you get the loan, you use it to pay your credit card balances. Going forward, you only need to make your loan payments.

Since personal loans often have lower interest rates than credit cards, you can save money on interest this way. An even more important benefit with this method is the structure it provides.

When you're paying off credit cards, the amount you pay is largely up to you. You only need to make relatively small minimum payments, and there's no fixed timeframe to pay back what you owe.

With a loan, you have a fixed monthly payment and a loan term. If you've found it hard to pay as much as you should towards your credit cards, then the stricter structure of a loan could keep you on track.

Those are the most effective and popular strategies for paying off credit card debt. Now that you know what your options are, you can choose the one that works best for your situation.

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