9 Ways to Pay Off Credit Cards Faster - Cut the Rate, Shrink the Balance

Just the Tip:

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.

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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 with most of them. The ones that change your payments need no one’s approval, so you can start them with your next paycheck.

Cut the rate

1. Move the balance to a 0% card

A 0% rate is as low as a rate goes. Until it ends, the balance you move costs no interest, so every payment you make goes to the debt itself.

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.

2. Ask your issuer for a lower rate

No new card needed here. Keep paying $200 a month on a $6,000 balance after a cut from 28% to 22%, and it’s 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.

3. Consolidate into a cheaper, shorter loan

Unlike your cards, a loan comes with a date for your last payment, and it can cut the rate when a new card or a phone call can’t.

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.

4. Lower your rates through credit counseling

Instead of a new card or loan, a nonprofit agency arranges this cut with your issuers, though they usually close the cards on the plan.

If card rates above 20% keep your balances from shrinking, ask a nonprofit credit counseling agency about a debt management plan. The agency asks your card issuers to lower those rates, often to single digits, and you pay off the cards with one monthly payment instead of a new loan.

Shrink the balance

5. Put extra money on the highest-rate card first

With more than one balance, this rule decides which card gets every extra dollar, whichever move on this list it comes from.

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.

6. Make each payment the day your paycheck arrives

This one takes no extra money, so you can start it this month, even with nothing to spare.

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.

7. Set autopay to your statement's three-year payment

Pair it with any rate cut on this list, and the same payment clears the card in less than three years.

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.

8. Pay small, unplanned sums toward the card

Extra money reaches the balance this way without asking anything more of your monthly budget.

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.

9. Send money you'd invest to the card

If you invest while carrying a balance, the card’s rate decides where each dollar does more, and past any 401(k) match, that’s usually the card.

Before you weigh paying off debt against investing, collect your full 401(k) match. Then let each debt’s after-tax interest rate decide. Pay off any debt charging more than about 8% first, invest while you pay debt under 4% on schedule, and split your extra cash when a rate lands in between.

Every move here either lowers your rate or sends more to the balance, and the fastest payoffs do both. Start a payment move with your next paycheck, and ask for the rate cut your credit qualifies you for.

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9 Ways to Pay Off Credit Cards Faster – Cut the Rate, Shrink the Balance