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Credit cards can be a useful financial tool. But credit card debt is often bad news. Owing money on a credit card doesn't make you financially irresponsible. But if you're in this situation, you'll want to get rid of that credit card debt as quickly as possible. Here's how to pay off a credit card fast.
The longer you have an outstanding balance on a credit card, the more interest you'll rack up on your debt, making it cost more. If your credit card has a high interest rate attached to it, then it's even more important to try to pay off your balance as soon as you can. You can use this credit card interest calculator to see how much interest your balance may be costing you.
Paying off a credit card fast can also help your credit score improve. One factor that goes into calculating your score is your credit utilization ratio, which measures the amount of available revolving credit you're using at once. Even if you make your minimum payment on time every month, your credit score could go down if you carry too high a balance.
To pay off a credit card fast, you'll need extra money to put toward your debt. To that end, here are several steps you can take to get your hands on more cash.
You may already be living pretty frugally and spending money mostly on essential expenses, like rent, food, and transportation. But if there's any wiggle room at all in your budget, it pays to cut back in those spending categories that allow for it.
Housing may be the largest expense you grapple with every month. If it's possible to lower that expense by splitting your rental costs with a roommate, it'll help free up cash to put toward your credit card debt.
If you're already spending minimally and can't do anything to reduce your housing costs, getting a second job could help you get more money to put toward your credit card debt. Even if you only have time to work a few extra hours each week, earning more money could help you make a dent in your credit card balance.
If you've managed to scrounge up some extra money to pay off your debt, you can use a debt payoff strategy to tackle it instead of (or along with) debt consolidation, which we'll cover in a minute.
Here are two ways to pay down your debt:
There are pros and cons to each approach, but if your goal is to shed your debt quickly, you may want to also consider consolidating your debt.
RELATED: Check out The Ascent's debt snowball calculator to see which debts you should pay off first when using this method.
MORE INFO: See The Ascent's complete comparison of debt snowball vs. debt avalanche.
If you owe money on multiple credit cards, debt consolidation could be your ticket to paying it off faster. There are several ways you can consolidate credit card debt.
With a balance transfer, you move your existing credit card balances onto a new balance transfer credit card and then pay off that single card every month. Often, balance transfer credit cards come with a lower interest rate than what your current credit cards are charging you. And many balance transfer cards come with a 0% introductory APR, where you pay no interest at all for a limited period of time.
Now to qualify for a balance transfer offer, you'll need to have a good credit score. If you don't, this may not be an option.
If you get a balance transfer card with a 0% introductory APR and you don’t pay off your balance by the end of the intro period, you’ll accrue interest on the remaining balance. Plus, most balance transfer cards charge a fee of 3% to 5% of the amount you transfer.
Though balance transfers have their drawbacks, it's an option worth looking into because it could make your debt much less expensive to pay off. You can use this balance transfer calculator to figure out how much you stand to save with a balance transfer.
If a balance transfer seems like the right move for you, take a look at our list of the Best Balance Transfer Credit Cards to see if one is the right fit for your needs. You can also check out these three balance transfer cards that we rate highly.
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Wells Fargo Reflect® Card | Citi Double Cash® Card | Discover it® Balance Transfer |
Rating image, 4.50 out of 5 stars.
4.50/5
Our ratings are based on a 5 star scale.
5 stars equals Best.
4 stars equals Excellent.
3 stars equals Good.
2 stars equals Fair.
1 star equals Poor.
We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs.
= Best = Excellent = Good = Fair = Poor |
Rating image, 4.50 out of 5 stars.
4.50/5
Our ratings are based on a 5 star scale.
5 stars equals Best.
4 stars equals Excellent.
3 stars equals Good.
2 stars equals Fair.
1 star equals Poor.
We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs.
= Best = Excellent = Good = Fair = Poor |
Rating image, 5.00 out of 5 stars.
5.00/5
Our ratings are based on a 5 star scale.
5 stars equals Best.
4 stars equals Excellent.
3 stars equals Good.
2 stars equals Fair.
1 star equals Poor.
We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs.
= Best = Excellent = Good = Fair = Poor |
Credit Rating Requirement:
Falling within this credit range does not guarantee approval by the issuer. An application must be submitted to the issuer for a potential approval decision. There are different types of credit scores and creditors use a variety of credit scores to make lending decisions.
Recommended Credit Score required for this offer is: Good/Excellent (670-850)
Good/Excellent (670-850) |
Credit Rating Requirement:
Falling within this credit range does not guarantee approval by the issuer. An application must be submitted to the issuer for a potential approval decision. There are different types of credit scores and creditors use a variety of credit scores to make lending decisions.
Recommended Credit Score required for this offer is: Fair to Excellent (580-850)
Fair to Excellent (580-850) |
Credit Rating Requirement:
Falling within this credit range does not guarantee approval by the issuer. An application must be submitted to the issuer for a potential approval decision. There are different types of credit scores and creditors use a variety of credit scores to make lending decisions.
Recommended Credit Score required for this offer is: Good/Excellent (670-850)
Good/Excellent (670-850) |
Welcome Offer: — |
Welcome Offer: Earn $200 cash back after you spend $1,500 on purchases in the first 6 months of account opening. This bonus offer will be fulfilled as 20,000 ThankYou® Points, which can be redeemed for $200 cash back. 20,000 ThankYou® Points |
Welcome Offer: N/A Discover will match all the cash back you’ve earned at the end of your first year. |
Rewards Program: N/A |
Rewards Program: 2% cash back: 1% when you buy plus 1% as you pay Up to 2% cash back |
Rewards Program: Earn 5% cash back on everyday purchases at different places you shop each quarter like grocery stores, restaurants, gas stations, and more, up to the quarterly maximum when you activate. Plus, earn unlimited 1% cash back on all other purchases—automatically. 1%-5% cash back |
Intro APR: 0% intro APR for 21 months from account opening on purchases and qualifying balance transfers Purchases: 0% intro APR, 21 months from account opening Balance Transfers: 0% intro APR, 21 months from account opening on qualifying balance transfers |
Intro APR: N/A Purchases: N/A Balance Transfers: 0%, 18 months |
Intro APR: Purchases: 0%, 6 months Balance Transfers: 0%, 18 months |
Regular APR: 18.24%, 24.74%, or 29.99% Variable APR |
Regular APR: 19.24% - 29.24% (Variable) |
Regular APR: 17.24% - 28.24% Variable APR |
Annual Fee: N/A $0 |
Annual Fee: $0 |
Annual Fee: $0 |
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Debt consolidation loans are personal loans you take out for consolidating and paying off existing debt, like credit card balances. The upside of using a debt consolidation loan to pay off credit cards is that the interest rate you pay on your loan will generally be a lot lower than what your credit cards charge.
Also, with a debt consolidation loan, you'll typically get more time to pay off your credit card debt at a reduced rate than what a balance transfer will give you. It's rare for a balance transfer card's introductory rate to last more than 21 months. In many cases, those 0% offers run out after 12 to 18 months. With a debt consolidation loan, you might easily get five years to pay off your credit cards at a lower interest rate.
Another good thing about a debt consolidation loan is that it won't hurt your credit score the same way a high credit card balance will. That’s because unlike credit card balances, loan balances won’t increase your credit utilization ratio. And if you make your monthly payment on time consistently, it could actually help your credit score improve.
If you have a lot of home equity in a property you own, you may be able to consolidate your credit card debt via a cash-out refinance. With a cash-out refinance, you borrow more than your existing mortgage balance, and you can use the rest of the money for any purpose.
Say you owe $300,000 on your mortgage and do a $320,000 cash-out refinance. You'll get a check for the remaining $20,000. If that's what you owe on your credit cards, you'll be able to pay off those balances immediately. You'll then have to pay off your larger mortgage, but the rate attached to your home loan will generally be much lower than what credit cards charge. This is especially true if you have a high credit score.
Paying off credit card debt quickly boils down to two things: Coming up with money to put toward your debt, and finding the most efficient way to pay that debt off (which generally involves consolidating it in one way or another). Now that you know what it takes to pay off your credit cards, you can move forward with your plan rather than spend your days letting your debt stress you out.
Some other questions we've answered:
You can pay off a credit card debt more quickly by consolidating that debt and being strategic about coming up with extra money. A balance transfer is a good way to consolidate debt, but you can also look at a personal loan -- or a cash-out refinance if you own a home.
You may not have money to pay off a credit card now. But certain changes could help you come up with the cash you need to knock out your debt. Those could involve getting a roommate to lower your housing costs or taking on a side job.
Yes. A debt consolidation loan is a personal loan used to pay off debt. This can be an affordable way to pay off credit cards. If you own a home, you can also do a cash-out refinance, which is a mortgage loan that can be used to pay off debt.
The minimum monthly payment varies by credit card issuer, but many require you to pay the greater of a fixed dollar amount, i.e., $35 or $40, or a percentage of the overall balance, often ranging from 1% to 3%. So on a $5,000 credit card balance, you could expect minimum monthly payments of $50 to $150, or 1% to 3% of your balance. This amount will decrease as you pay down the balance.
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We're firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers. The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.