To pay off credit card debt faster and for less, stop new charges first, then cut your rate and send more money to the balance, sooner. When a rate cut lowers the payment you have to make, keep paying at least the old amount, so what you save in interest goes to the balance instead.
Every dollar you charge adds back a dollar you just paid, so put everyday spending on a debit card or cash until the balance is gone.
The moves below that cut your rate each need approval from a card issuer or a lender, and good credit helps. The ones that change your payments need no one’s approval, so you can start them with your next paycheck.
1. The Debt Avalanche Method Saves More Money Than the Debt Snowball
Start here if you carry more than one balance. Whatever else you try from this list, this is the order for paying them down.
Every extra dollar you put toward a debt saves interest at that debt’s rate, however big or small the balance. That’s why the debt avalanche, which targets your highest rate first, costs less than the debt snowball, which starts with the smallest balance. Pay every minimum, then send extra dollars to the debt with the highest rate you’ll actually pay. Read More →
2. A Balance Transfer Card Can Save Thousands - If You Use It Correctly
To get the full savings from a balance transfer card, clear the balance before the 0% rate ends. Divide what you move, plus the transfer fee, by the promo months and set autopay for that amount. Keep new purchases off the card, never pay late, and don’t let the old card fill back up. Read More →
3. Your Credit Card APR Is Negotiable - Most Cardholders Who Ask Get a Cut
Keep paying $200 a month on a $6,000 balance after a cut from 28% to 22%, and the card is paid off about eight months sooner, by our math.
If you carry a credit card balance, call your card issuer and ask it to cut your interest rate. Issuers grant most of these requests, and each percentage point off saves about $10 a year for every $1,000 you owe. Lead with your on-time payment record and a better offer from another card. Read More →
4. Debt Consolidation Loans - A Lower Rate Can Still Cost More Than Your Cards
A card balance has no end date, but a loan does. If its term ends before your cards would be paid off at today’s payment, the debt is gone sooner.
A debt consolidation loan saves you money only when its APR, the yearly rate with the origination fee counted, is lower than your cards’ rates. Stretching the term adds interest that can outweigh what the lower rate saves, so prequalify with several lenders and choose the shortest term with a payment close to what you pay now. Read More →
5. Credit Card Interest Is Charged Daily - Pay When You're Paid, Not When It's Due
If you carry a credit card balance, your issuer charges interest on it every day, so the same payment saves more interest when it lands sooner. Pay as soon as the money is in your account, such as the day each paycheck arrives, instead of waiting for the due date. Read More →
6. Pay Off Your Credit Card in Three Years - Your Statement Shows the Payment
If you carry a credit card balance, your statement has a Minimum Payment Warning box. Besides the cost of paying only the minimum, it lists the monthly payment that clears the balance in three years, unless your minimum already does. Set autopay to that amount and keep it fixed as the balance falls. Read More →
7. The Debt Snowflake Method - Send Small Savings to Your Balance the Same Day
The debt snowflake method sends every small, unplanned sum straight to your debt. When a coupon saves you $6, a rebate pays $15, or an old gadget sells for $20, pay that amount toward your balance the same day, on top of your regular payment. A few dollars a day can cut years off your payoff. Read More →
Editorial & Advertiser Disclosure: The editorial content on this page is not provided, commissioned, reviewed, approved, or otherwise endorsed by any advertiser. Opinions expressed here are ours alone, not those of any advertiser. The offers that appear on this site are from companies that compensate us. That compensation may influence which products we cover and where and how they appear on a page – including the order in which they appear – but it does not influence our evaluations, ratings, or opinions. We do not include every company or offer available in the marketplace.
Related:
