Being in credit card debt feels suffocating. It’s like a constant financial handicap, following you around everywhere and preventing you from seizing the opportunities you deserve. When you’re drowning under a sea of unpaid bills, all you want is to swim to the surface as quickly as possible.
But even though it only takes one ill-advised shopping spree to find yourself in debt, it can take much longer to get out of it. While credit is a necessity for most people, it can also function as a modern honey trap: enticing and easy to fall into, but a sticky mess to crawl out of.
You may not be able to change your situation overnight, but there are absolutely ways to speed up the process. Here are some of the best methods to use, so you can be confident that your debt payoff journey is headed in the right direction.
Transfer your balance
When it’s going to take you a while to dig yourself out of credit card debt, a balance transfer can be the one tool you need to accelerate that process.
It’s incredibly easy to transfer balances from one credit card to another. Many people do this because the new card has a 0% APR on balance transfers and little to no balance transfer fee. If you’re currently paying 15% APR on a $5,000 balance, you could pay almost $3,000 in interest charges if you make the minimum payments.
Instead, transfer your balance to a card with no interest on balance transfers. Each card has their own rules about how long the balance transfer offer lasts, the APR it will switch to after the promotion has ended and if there’s a balance transfer fee. Some cards extend the 0% interest to 21 months, so you could have almost two years to pay down your debt.
If you still have a hefty balance once the temporary 0% APR period has ended, consider finding another card to transfer your balance. Your credit report will get a small ding for opening a new account, but it’s worth saving hundreds or even thousands in interest.
To qualify for a balance transfer, you need to have a good credit score – typically 680 or higher. Some cards might want an excellent score, which is 750 or more. If you don’t qualify for a balance transfer right now, don’t get discouraged. As long as you keep making payments on a regular and timely level, your score will improve. Try applying for a balance transfer in six months.
Make multiple payments
Credit cards are one of the worst forms of debt to have because they calculate interest based on your average daily balance. The higher the balance, the more you pay in interest. So instead of waiting for the final due date, make a few payments a month.
“The best trick is to pay early and often on your credit cards,” said Lee Huffman, travel blogger at Bald Thoughts. “The sooner you pay down your credit card balance, the lower the average balance is when the bank calculates the interest you owe. Most credit card companies will let you pay multiple times throughout the month, so whenever you have a few extra dollars, make a quick payment on your card online or via their mobile app. It will add to big savings over the long term.”
Calculate how much you can pay each month and set a calendar reminder every week to make a manual payment.
Negotiate your interest rate
If you can’t do a balance transfer and are struggling to pay down the principal, then it’s time to call your credit card provider to ask for a better interest rate.
First, this will only work if you’ve been a responsible and consistent borrower, always paying your bills on time. Be polite when you call and tell them about other rates you’ve gotten. Companies want to keep their customers around and if you hint that you might be leaving, they could be more willing to negotiate with you.
It’s not a guarantee that you’ll get a lower rate, so don’t get discouraged if you get rejected. Ask to speak to a manager or make a reminder in your phone to call back in a month. If you have balances on multiple cards, do this for every card you have. Each credit card has their own standard and you can’t predict whether someone will agree to your request or deny you.
Choose the snowball or avalanche method
When you’re paying off multiple forms of debt, there are two great ways to go about it: the snowball method or avalanche method.
The snowball method is when you start paying extra on the smallest balance first. Then, when that loan is finished, you add the amount you were paying to the next highest balance. You do this until all of the credit cards are repaid.
Finance guru Dave Ramsey popularized the snowball method of debt repayment. Most people say you should pay your highest interest balance first, but Ramsey said that people tend to pay off their debt faster with the snowball method.
However, if you mostly care about saving money on interest, then you should use the avalanche method. List your loans in order of highest interest rate to lowest rate. Pay extra on the highest rate until that’s paid off. Then, add that amount to the next highest rate loan. This method makes the most sense mathematically, since you’ll be knocking out the highest rate credit cards first.
Take out a personal loan
If you have a good credit score, you might qualify for a personal loan with a much lower interest rate than you currently have on your credit card. For example, those with excellent credit can get a personal loan as low as 4%. That’s much better than the average credit card APR of 13%.
Like a balance transfer, having a lower interest rate will allow you to repay the loan faster and with fewer interest charges. If you have multiple credit cards, you can consolidate them on one loan, which will also simplify your payoff system.
Even if you don’t have excellent credit, try calling a few local banks or credit unions to see what interest rates are available to you. You might be surprised what you qualify for. Even if you’re only saving a few percentage points, that’s still money you’re not paying on interest.
If you’re a member of the military, you have access to low-interest loans at any time. Use these to pay off your credit cards.
If you do take out a personal loan for your credit card debt, it might be worth closing the cards if you don’t want to rack up a new balance. Using credit cards is great for rewards and extra purchase protection, but it’s easy to spend more than you can afford.
Revise your budget
If you’re truly serious about paying off your credit card debt as quickly as possible, you won’t get there just by using credit card wizardry. Eventually, you’ll have to free up some money in your budget.
This can be as simple as re-prioritizing, or as involved as building a new budget from the ground up. It all depends on how dire your credit card situation is, and how committed you are to paying your balance off ASAP.
Here are some simple ways to free up some money in your budget:
- Cut down on buying meals to-go or eating at restaurants. The average person eats out 2-3 times a week. If you spend about $10 each time, that’s between $20-$30 a week or $80 to $120 a month (more if the month has five weeks). Get yourself a slow cooker and an easy recipe book.
- Switch to generic brands of food and household products. You can rarely tell the difference between generic brands, so why spend more for the label?
- Find free or cheap social events to host or attend instead of spending money at bars or clubs. Every city has a slew of free or cheap events to take advantage of, such as free days at the zoo or local festivals sponsored by different cultural groups.
- Start biking, walking or taking public transportation instead of driving. The less you drive, the more you save on gas, maintenance and even car insurance. Plus, your car will last longer, prolonging the day when you have to replace it.
- Cancel your gym membership and workout at home or outside. Use the backyard as your workout area. For what you spend on a gym membership, you could buy most of your own equipment. Rent fitness DVDs from the library.
The bottom line
If you simply can’t find enough money in your budget to pay off your debt as quickly as you’d like, you should try to bring in some more cash on the side. You can do this by getting a side gig, asking for a raise at your current job or selling some of your belongings.
Remember, the longer it takes to pay off your credit card, the more you’ll pay in interest. Make it game and see how quickly you can pay it off. When you’re done, celebrate with a night out or a weekend getaway.