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Credit card debt is always difficult to deal with, but as it gets larger, paying it back gets a whole lot harder. If your total credit card balances are $25,000 or higher, they'll go up by hundreds of dollars every month because of interest. And it could cost you $500 or more just to make minimum payments.
Most consumers will take several years to get out of credit card debt and end up paying more in interest than they originally charged. Although it does take time to pay off this much debt, following a good debt repayment strategy will speed up the process and help you save on interest.
Many consumers don't realize you can do this, but it is possible to negotiate a lower interest rate with your credit card companies. All you need to do is call the number on the back of your card and ask. It will help your cause if you've always paid on time.
Even though you may not be successful with every card you have, any deal you get from a card issuer could save you hundreds or even thousands of dollars in credit card interest as you pay off your balances.
The most cost-effective way to pay off credit card debt is with balance transfers. Here are the steps to follow:
Now, let's look at how this works in more detail.
First, you need a balance transfer card. This type of credit card offers a 0% intro APR on balance transfers. That means you can pay zero interest for the entire introductory period. These cards almost always charge a balance transfer fee, but it's a small price to pay considering how much you'll save on interest.
Check out the best balance transfer cards to find one that works for you. There are two things to look for here:
You probably won't be able to transfer all your credit card debt onto your balance transfer card. The amount you transfer, including fees, can't exceed the card's credit limit, and some cards also have their own separate balance transfer limits. That's why you'll start by transferring your highest-interest credit card debt.
Next, you need to pay off your balance transfer card as quickly as possible. Only make minimum payments on your other credit cards, and put every cent you can toward your balance transfer card.
Once you've paid off the balance transfer card in full, you can apply for a new one.
By following this method, you'll continually refinance your highest-interest credit card balances at a 0% intro APR. This will maximize how much you save and how quickly you're able to pay off your debt.
Great for: Long 0% intro APR
Good/Excellent (670-850)
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
Regular APR
18.24%, 24.74%, or 29.99% Variable APR
Rewards
N/A
Annual Fee N/A
$0
This no-frills card is a solid choice if your priority is to avoid credit card interest for as long as possible. It offers an incredible 0% intro APR for 21 months from account opening on purchases and qualifying balance transfers. The balance transfer fee (5%, min: $5) is higher than some cards — but if you want an equally long intro APR on purchases, then this card is hard to beat.
Although balance transfers work well for credit card debt, they aren't right for everyone. Like most of the best credit cards, the top balance transfer cards are typically only available for consumers with good to excellent credit. If your credit score isn't at least near 670, you could have trouble qualifying.
Debt consolidation loans are another option, and many lenders offer loans for borrowers who don't have high credit. You could get a loan large enough to cover all or a portion of your debt and use that loan to pay off your credit cards. Then, you'd pay back your loan in fixed installments and ideally at a lower interest rate than you had before.
You'll need to find a lender with minimum requirements you can meet, but there are plenty of personal loan lenders available to fit many people's income and credit score. If you don't have a high credit score, here are a few lenders that focus on borrowers with poor to fair credit:
Make no mistake about it -- there's no magic bullet to wipe out over $25,000 in credit card debt. Even with balance transfer cards, you'll need to be diligent about paying as much as you can every month, and the process could still take years.
But this method does help you in a few key ways:
If you can stick with it, this is the smartest way to pay off a large amount of credit card debt.
Some other questions we've answered:
Our Credit Cards Expert
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