How to Pay Off Credit Card Debt FAST: 4 Easy Steps!
Do you have credit card debt, whether it is a small or large amount? The question we need to ask is, how to pay off credit card debt fast, or what are some tricks to paying off credit cards?
According to Lexington Law, 43 percent of Americans carry over a credit card balance each month, and in turn, pay interest on that money. This group of us are called revolvers.
So, if 43 percent of us carry over our balance each month, that means 57 percent of us do not. Those 57 percent of Americans pay their balance each month, and don’t spend money on interest! This group of us are called transactors.
We all want to be in that transactor category at a minimum, or even better, we go into a third group and not use credit cards at all!
What was the question we needed to answer again? How to pay off credit card debt? What are some tricks to paying off credit card debt? Keep reading to find out!
Step #1 – Change Your Mindset About Money and Credit Cards!
I know the feeling. You are bored, watching some television. You are looking for something to do.
You decide I am going to buy a new Xbox and play some video games! On your way to the store, you realize you don’t have 400+ dollars laying around to make this purchase.
You spend the entire drive convincing yourself NOT to buy a new Xbox, you can’t afford it.
For some reason, you keep going. You head inside and pick up the Xbox One X and walk straight to the cashier. You tell yourself the entire time not to buy this; you can’t afford it.
You get to the checkout and whip out that credit card that still has enough available credit to buy the game system. It is now yours, so you head home to play some games. For a couple of weeks, you feel guilty about that terrible decision you made.
You see, that mindset has to change. You can’t buy things you WANT if you don’t have the money for it. You buy ONLY the things you NEED if you are carrying credit card debt over every month.
Credit cards are NOT extra income! Once you use them, you owe someone else money, and you will also owe them interest money if you carry it over for more than 30 days.
So step #1, probably the most crucial step, is to change your mindset and stop using credit cards like it is your money!
It’s a no-brainer to stop using your credit cards if you want to pay them off, but that is way easier said than done sometimes.
Don’t forget to read WARNING! Credit Cards Are Ruining Our Finances.
Step #2 – Create and Utilize an Effective Budget.
Why is this important, and how does this answer “how to pay off credit card debt”?
If you take the time to make a budget for your money, you will quickly see why this is important.
Maybe right now you are living paycheck-to-paycheck, and you don’t see any possible way you can pay extra to your credit cards and pay them off.
A budget will change that. For the vast majority of us, we have extra money! We are just blowing it on too many of those WANTS. Managing our money is a pivotal step to paying off credit cards.
I recommend you read How To – Zero Based Budgeting and start creating your budget right now!
Part of this process is going to be examining your spending for a little bit. I recommend you use 30 days as a good point of reference for your spending.
When you do this, you will find MANY areas you can cut back your spending!
One place I can say a lot of us can cut back instantly is eating out. Stop doing that! Read Save Money On Your Food Budget and start meal planning/prepping.
You can make it easier and still save a substantial amount of money by using the “5 dollar meal plan.” They will send you a meal plan, with some very frugal recipes and it will even include grocery lists! Check them out for a 14-day free trial and if you don’t like it, cancel it!
However, I digress, so back to step #2 and creating and utilizing a budget! Managing your money more effectively WILL free some money up to pay off those credit cards!
Read How We Paid Off $25K in Debt Fast, in Less Than 9 Months to see how much money a budget can free up.
Step #3 – Make a Plan!
Now you are wondering, “seriously, make a plan?” The question is how to pay off credit card debt fast and your talking about making a plan!
The plan is simple right, pay extra money to your credit cards until they are paid off. That is one of the tricks to paying off credit cards right?
Well, a plan is one of the most critical aspects of this!
No, it isn’t as simple as “pay extra money to your credit cards” until you pay them off. Hold on, I take that back, it is that simple, but you need to plan WHICH ones you are going to pay off in WHAT order!
So what order should you pay them off? I prefer the debt snowball method over the debt avalanche when I plan the order in which I will pay off my credit cards.
The debt snowball method means you will pay your credit cards off in order of lowest balance to highest balance. The avalanche is by interest rates. Pay off the highest interest rate first working your way to the lowest interest rate card.
If you want, feel free to go on over and read Debt Snowball: Best Debt Payoff Method.
The reason I prefer the debt snowball is that it keeps us motivated. Each time you pay off a credit card and get that “win,” it will make you work even harder for the next one!
The “feel-good” and motivation we get when we pay that credit card off could go right back to step #1 with our mindset changes! Changing our behavior is crucial!
Step #4 – Make Extra Money.
After you created your budget and determined how much extra money you have each month, you can then figure out how long it will take you to pay off your credit cards.
You can find calculators all over the internet to do the complicated math for you, such as this one.
Step #4 can be so demotivating right? How to pay off credit card debt fast is not in this step at all, or is it?
Well, so now you know, it can take a VERY long time to pay off those credit cards, depending, of course, how much you owe and how much extra money you can pay towards them.
But, there are ways to make extra money to speed this process up!
Here is a list of some of the things I routinely do for extra money. Some of these won’t bring in extra cash, but they will save you some cash. Keep in mind, a penny saved is a penny earned.
Survey Junkie: Take some surveys in your spare time and make some extra cash. If you can’t stop that expensive coffee habit, this is a great way to pay for it!
Swagbucks: Watch videos, play games, surveys, shop! Lots of different ways to make some extra cash on this site.
Ibotta: Save money on your groceries! Just load the app before you shop to see what items qualify for cashback. Scan your receipt when you’re finished shopping and get the money back.
Trim: This app can find savings on your utility bills. There are not ALWAYS savings, but it will find them if they are there. Oh, also, this app can help you with your budget!
Amazon: We save a fair amount of money by shopping through Amazon. I think most of us know about Amazon by now but do you know about “subscribe and save?” If you have at least five items auto shipped monthly, you save 15 percent! That can add up quickly when you get things such as laundry detergent and body wash!
None of these things cost any money! You lose nothing but a few minutes of your time to sign up for them and use them. If you don’t like them, you cancel your account and move on.
Also, read 15 Best Work from Home Jobs that Pay Well. Plenty of ways here to make some extra cash! Listen, I don’t care how you do it, but you NEED to make extra money! If paying off these credit cards takes too long, you will lose your motivation to do so!
Find a way, any method you choose, to make some extra cash and USE THAT EXTRA CASH TO PAY OFF YOUR CREDIT CARDS! Earning extra income is the answer to how can I pay off my credit cards faster!
Other Answers to How to Pay Off Credit Card Debt Fast
Loans to pay off credit card debt? Tricks to paying off credit cards?
I feel it is essential to discuss these other areas concerning paying off credit cards.
These can be a viable method to pay off your credit card debt. Depending on your credit scores, you will save a substantial amount of money in interest charges.
Another benefit is you will have a definitive date that the loan will be paid off, and generally speaking, will be LONG before that credit card would have been paid off.
However, consolidations loans can also be horrible! If you didn’t follow step #1 and change your mindset, if you still have the same behaviors, you are going to use your credit cards again after you consolidate them.
If you do this, you now have two, or more, monthly payments to make vice the one consolidation loan payment. If you use those credit cards again, you are going to be in a far worse situation then before!
I have been there, done that! I am paying for a consolidation loan AND one of the credit cards I paid off with it!
Do NOT take out a consolidation loan for your credit cards without first changing your spending behaviors and above all, have a plan for your finances to stay away from those credit cards!
Credit Card Interest-Free Promotions:
Another viable option for paying down your credit card debt. I utilize these for my debt payoff plan.
Apply for a credit card with a 0% interest balance transfer promotion. Look for the ones that have the most prolonged period, as some go up to 21 months and maybe even longer in some cases.
The vital thing to note about using the interest-free balance transfers is you need to pay the balance in full before the promotion period ends or it then goes up to your standard interest rate on the remaining balance.
Because paying off credit cards in full is the goal here, again, have a plan and make sure you pay them off.
For example, I will balance transfer a certain amount to the interest-free card, and then set up an automatic payment for a certain amount of money! As part of my plan, I won’t balance transfer MORE than I can afford to pay off in the promotion period.
The amount of my automatic payment will be enough to give me several months of leeway in case something comes up. I plan all of this out BEFORE I balance transfer!
Two things I don’t recommend using:
Home equity loans and debt settlement companies!
Home equity loans to pay off credit cards are just a bad idea. If you for some reason, fail to pay, you can lose your home. If you didn’t follow step #1 and change your mindset, you could rack up more credit card debt.
Now, just as with a consolidation loan, you have multiple monthly payments instead of just the one.
The second thing I don’t recommend is the debt settlement companies, who charge you money to “negotiate” with your creditors and in the end, accomplish little to nothing for you. However, you still have to pay for them.
Debt settlement companies are just a bad idea. If you are in such a bad financial situation to even put thought into using those, trust me, there are better ways.
We just went through some of the better ways. Change your mindset, make a budget, make a plan, make extra money!
Cancel Your Credit Cards or Not?
One way to ensure you don’t just reuse your credit cards is to cancel them once they are paid off. You can cancel them even before you pay them off if you want.
One thing to keep in mind is that it can potentially affect your credit score negatively by throwing off your credit utilization numbers. The rule of thumb is to not use more than 30 percent of your available credit limits.
Every time your credit card balances are paid down, your credit utilization ratio is lower. Lowering your credit utilization raises your credit scores.
Raising your credit score will help you out with getting GOOD interest rates on consolidations loans if you choose to go that route.
Also, the better your credit score, the better the balance transfer credit card you can get. Do you want the credit card with 21 months of interest-free? You need to have a good credit score for that. Remember, the best credit card perks are for the best credit scores.
Why does this matter you ask, in regards to how to pay off credit card debt fast? Don’t you want to cancel them to ensure you don’t use them?
Each of our situations is different, but we each need to make sound decisions for us. In my case, I am keeping those credit card accounts open, and each time I pay money towards them and lower my overall balances, my credit score goes up.
Once they are ALL paid off, I plan to retain ONE credit card, and cancel the rest!
Did We Answer the Questions?
Let’s recap the questions:
- How to pay off credit card debt?
- How to pay off credit card debt fast?
- What are some tricks to paying off credit cards?
- How can I pay my credit cards off faster?
Paying off a substantial amount of credit card debt won’t happen overnight. It will take time; it will take hard work; it will take dedication!
However, the groundwork is laid out. Now, we must act!
One last thing I feel I should mention as it helps me immensely. Use Digit to save some money!
Digit uses an algorithm that figures out how much of your money you can afford to set aside and save. Once it figures that out, it will then take that amount of money from your account and put it in your Digit account.
You can even call it your “Credit Card Debt” account in Digit!
I have been using this for years and have never had any issues with this service, and I love it! I cannot recommend anything else as strongly as I recommend Digit! I cannot be happier with Digit and how it saves money for me!
YOUR TURN – Do you have any other answers for the question how to pay off credit card debt? Do you have any other tricks for paying off credit card debt? Let us know in the comments! Let’s chase financial freedom together and keep each other motivated!
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