Here are nine strategies to pay off credit card debt fast: The good news is that if you’re reading this article, you’ve already taken the first step to paying off credit card debt - you’ve taken the initiative to learn about your options. Luckily, there are many resources that can help you learn how to pay off credit card debt as fast as possible, so you can save money. NMLS # 1681276, is referred to here as "Credible."Īlthough credit card debt can be quite easy to get into, the high interest rates can make it hard to get out of. Although we receive compensation from our partner lenders, whom we will always identify, all opinions are our own. And be sure to consider how fees and other changes associated with refinancing might affect your decision.Our goal is to give you the tools and confidence you need to improve your finances. Ask your lender if this option might make sense for you. If refinancing is a possibility, you might be able to lower your interest rates and change other terms of your loan. That’s something to consider and budget for as you decide which debts might be worth consolidating. It may help to keep in mind that debt consolidation may involve fees and other costs. That could happen if the interest rate on your loan is lower than the rates on some or all of your debts. In addition to simplifying the bill-paying process, debt consolidation may also help you save money. Debt payoff with consolidationĭebt consolidation involves getting a payoff loan to combine some or all of your debts into a single monthly payment. But the “snowball” effect can provide frequent small victories to boost momentum. Once one small balance is eliminated, you can move on to the next-smallest balance until they’re all paid off.Ĭompared to other methods, this one may save you less money in the long run. The snowball method is about prioritizing small debts first, with the goal of eliminating them as quickly as possible. Once you pay off the balance with the highest interest rate, you could continue the “avalanche” by targeting your debt with the next-highest interest rate, and so on. Depending on your situation, that could mean paying off credit card debt first. To do that, make the minimum payment on all your debts every month, and then put any extra money toward your balance with the highest interest rate. The avalanche method is based on paying off high-interest debts first. And according to the Consumer Financial Protection Bureau, experts recommend keeping your credit utilization below 30% of your total available credit.Īfter making a list of debts and exploring factors that might help you decide which debt to pay off first, it might help to explore a few common strategies, with their pros and cons. The technical term is credit utilization ratio. One example is carrying high balances on revolving credit accounts, including credit cards. While any debt typically has the potential to affect credit scores, some may have a larger impact. That way, they could take advantage of the tax breaks. When people have debts that could lower their tax liability, they may decide to pay off their other balances first. The IRS may also allow student loan interest to be deducted. For instance, the IRS allows homeowners to deduct the interest paid on their mortgages in some situations. Some debts may help lower your tax bill-like when you qualify to deduct some or all of the interest you pay on them. That’s because interest applied to a high-balance loan could be costly over time. Highest loan balanceĪnother option is to pay off debt with the highest balance first, especially if the loan is accruing interest. If this is your plan, it may help to keep this in mind: If the debt with the highest interest rate is also your largest balance, it may take a while to pay it off. If the goal is to reduce interest, it could help to pay off the debt with the highest interest rate first. You could also consider a few other factors as you create a debt-payoff plan: Highest-interest debt It may help to start by listing your debts with their outstanding balance, minimum monthly payment and interest rate. That’s because interest charges can really add up over time. It can be helpful to come up with a plan for eliminating debt-because paying it over months or years can get expensive, or even make it more expensive. Ever wondered about how to get out of debt? Or which debt to pay off first? If you have different types of debt-like a mortgage, personal loan or credit cards-a number of factors can be involved, including the interest rate and balances on each account.
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