3 Strategies To Pay Off Credit Card Debt Fast

If you have credit card debt, you're not alone. In fact, more than 60% of Americans have a credit card and cardholders carry an average balance of $5,525 in 2021. While it can be worthwhile to have a card that gives you the convenience of cashless spending and the opportunity to earn rewards, all of those perks are meaningless if you're rolling a balance every month and paying high interest.

If you've been suffering from carrying credit card balances month to month, paying off that debt fast might be easier than you think. The key is having a solid strategy with a plan that you commit to sticking to it.

Several strategies help you pay off your credit card debt, but not all might be the best fit for your situation. If you want to tackle your debt head-on, you'll need to consider the main factors of interest rates, fees, and how much you can afford to pay each month before settling on the best repayment method. These three strategies can help you decide which course of action best fits your current situation to quickly pay off any credit card debt you have.

Reprioritize Your Spending

Start by categorizing your monthly spending between essential and discretionary expenses.

Next, look for areas in your discretionary expenses where you can cut back. Then take the money you’ve freed up and apply it to paying down your credit card debt.

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Target One Credit Card Debt At A Time

Do you carry more than one credit card in your wallet with an outstanding balance on?more than one card?

If so, data shows that the majority of credit cardholders are paying the minimum on each card. This is the minimum requirement for not having your card blocked, but it keeps you in a vicious bad debt cycle. Remember credit card debt has one of the highest interests.

On top of paying the minimum payment on each of your cards; your focus shall be on paying down the total balance on one card at a time. You can choose which card you target in one of two ways:

1. Check the interest rate section of your statements to see which credit card charges the highest interest rate, and concentrate on paying that debt off first.
2. Pay off the card with the smallest balance first, then take the money you were paying for that debt and use it to pay down the next smallest balance.

Related: Schedule a complimentary "debt pay off strategy" session

After paying off one of your card's outstanding balance, you can reallocate the same monthly payment to your other cards at paying more than the minimum on that next card with the highest interest. Every dollar over the minimum payment goes toward your balance, which means you pay less in interest. With this discipline, you kill off your outstanding debt one card at a time.

Consolidate And Conquer

Consolidating your debt can let you combine several higher-interest balances into one with a lower rate, so you can pay down your debt faster without increasing payment amounts.

Here are three common ways to consolidate?debt:

1. Use a balance transfer credit card from high-interest credit card(s) to a balance transfer credit card that offers no interest for periods up to 6, 12, 18, and sometimes 20 months (depending on the card issuer policy). This strategy offers a long stretch of time to pay off your debt, but the trick is to pay off the balance transfer before the period with zero interest ends. After this grace period, interests go up high again in the vicinity of your current card that you're already struggling with. If you use this strategy, the best advice is not to use the new card (you used for balance transfer) for any purchase. In other words, keep this new card for the only purpose to pay off your credit card at zero interest within the time frame provided to you. It's important to note that you can't complete a transfer between cards issued from the same bank.?
2. Take advantage of a low-interest personal loan to pay off high-interest card debt. To?improve your chances for personal loan approval, you should be lowering your debt to income ratio, which is?one of the main criteria that determine your loan eligibility.
3. If you have equity in your home, you may be able to use it to pay down card debt. A home equity line of credit may offer a lower rate than what your cards charge. Be aware that closing costs often apply, but an extra benefit is that home equity interest payments are often tax-deductible.

If you do consolidate, keep in mind that it’s very important to reprioritize your spending to avoid racking up new debt on top of the debt you’ve just consolidated.