3 Ways Of Paying Off Credit Card Debt Sooner

Hi everyone, thank you for coming back to my blog. I hope you found my last blog interesting and useful, where I covered ‘3 Steps To Build Your Credit Score Rapidly’.

In today’s blog, I am going to cover some of the ways you can pay off your credit card debt sooner.

Credit card debt normally occurs when you have multiple credit cards and the expenditure on these cards is higher than the amount you can afford to pay them off. Another way it can arise, is if the full credit balance of these cards is not paid off each and every month via a direct debit, instead either the minimum amount or part of the credit balance is paid off each month.

The reason you want to pay off credit card debt as soon as possible, is because having a high credit balance can reduce your credit score and therefore severely reduce your ability to unlock access to loans and mortgages with the most favourable terms.

Here are some of the ways you can start paying off that credit card debt:

1. Debt Avalanche Method

The debt avalanche method of paying off credit card debt can help you save money on interest. After making minimum payments on all of your credit cards, put some extra money on the card with the highest annual percentage rate (APR). Once that’s paid off, move to the card with the next highest APR, and so on. This will allow you to reduce the total amount you’ll pay by decreasing the amount of interest you accrue.

2. Snowball Method

While getting rid of high interest debt first makes more sense financially, it can be hard to stay motivated if that credit card’s balance is high and taking a long time to pay off. In that case, it might be wise to look into the snowball method.

With this method, you put extra money towards the credit card with the lowest balance while continuing to make minimum payments on the rest of your credit cards. After that card is paid off, apply the extra funds to the credit card with the next lowest balance, and so on. You will pay more in interest in the long run with the snowball method, but you’ll see progress paying off cards sooner, which can encourage you to keep going.

3. Debt Consolidation

If you have a good credit score, it might make sense to look into debt consolidation.

One way to consolidate debt is by getting a balance transfer card that comes with an introductory 0% APR for a set period. During this set period (which can last as long as 20 months in the UK), you pay no interest on the balance you’ve transferred. This will help you lower the amount you owe because you’ll pay less in interest, as long as you pay off the entire transferred balance by the end of the introductory period.

Another option is to take out a debt consolidation loan with a lower interest rate than your credit cards have. The idea is to combine multiple balances into one loan with fixed monthly payments to save on interest and possibly pay off the debt much faster. Rolling numerous payments into one payment can also make it easier for you to manage your debt.

But, before choosing a strategy to deal with your credit card debt, it’s a good idea to check your credit score because balance transfer credit cards typically require a good to excellent credit score. And while it might be possible to qualify for a debt consolidation loan with poor credit, the interest rates might be higher than the APRs on your current credit cards.

As you can see, there’s more than one way to pay off credit card debt and whatever you choose to do, you can drastically cut down your interest payments and become debt-free sooner, rather than later.

Whether or not you can pay off your credit cards immediately, make it a priority to maintain a positive payment history and use credit responsibly! Even if it takes a while to clear your balances, your credit will thank you in the end and so will your finances.

Until next time, thank you and stay safe.