By: America's Credit Union on January 19th, 2023
7 Secrets Revealed: How to Pay Off Credit Card Debt Fast
If you feel overwhelmed by mounting debt, you’re not alone. Americans reportedly have more than 500 million credit cards and balances exceeding $807 billion. The average family credit card debt stands at approximately $6,270, and there are no quick fixes for people with multiple cards and mounting debt.
Although credit cards offer great benefits such as added protection when compared with cash, convenience, and the necessity for online purchases, they can become a crutch for those who struggle to use them correctly. If you feel like you are in quicksand trying to gain control of your credit card spending, the following strategies provide a roadmap of how to pay off credit card debt quickly.
1: If You Want to Pay Off Credit Card Debt Fast, Put Your Credit Cards Away
One of the fundamental strategies of how to pay off credit card debt fast involves not racking up new charges. People who routinely swipe plastic tend to pay down a portion only to use the wiggle room again. This cycle of reducing balances only to see them tick up the following month creates a negative spending cycle in which borrowers fail to achieve a zero balance.
In order to break habitual swiping, it’s essential to remove credit cards from wallets or purses and delete them from discretionary spending platforms. The old adage of “out-of-sight, out-of-mind” couldn’t be more appropriate in this situation. Consider switching any impulse-buying habits to cash only.
2: Calculate Your Total Credit Card Debt
People who find themselves saddled with high credit card balances often possess only a vague idea about how to pay off credit card debt. It’s not uncommon to review monthly bills and credit card balances before making additional damaging payment decisions. Most members hope to gradually catch up on outstanding credit card balances, but unanticipated expenses and income shortfalls seem to prevent the majority of people from becoming debt-free.
That’s why it makes sense to create a tangible, fact-based accounting of your total credit card debt and a clear plan on how to achieve a zero balance. One of the tried-and-true methods to get started involves using ACU's credit card payoff calculator which provides insightful detail on what it will take to pay off your credit card balance and what you can change to meet your repayment goals.
3. Use the Debt Snowball Method to Pay Off Credit Card Debt Fast
One of the traditional ways to approach debt reduction entails making minimum payments on every credit card account except the one charging the highest interest rate. The high-interest card becomes the focus of maximum possible payments in an effort to pay it off completely. Once that card has successfully been paid off, the card with the next highest interest rate becomes the next target. This process is typically called the “avalanche method.” However, a new approach called the “snowball method” may prove a more fruitful way to pay off credit card debt.
The snowball method prioritizes payments made on the smallest credit card balances. Similar to the avalanche approach, minimum payments are usually made to all other accounts. Targeting smaller balances first accelerates the pace of zeroing them out one at a time. Cardholders set aside the credit cards with no balance remaining and continue targeting the next lowest balance.
4: Reduce Your Spending
Learning how to pay off credit card debt also requires consumers to live within their financial means. The idea of reducing monthly spending can be something of a tough pill to swallow because it may mean a reduced quality of life. It’s not unusual for people with multiple credit cards at or near their limits to be trying to maintain a comfortable lifestyle.
But truth be told, numerous high-interest credit cards may exacerbate overspending problems. Rising balances come with more money going toward interest. One way to look at the issue is to consider the money spent on interest as a portion of your income that’s being wasted.
A budget that pays down balances each month may call for people to nix those little extras. But going without them until you get debt-free is only a short-term inconvenience. It can be diverted back to lifestyle enhancements once your money isn’t being spent on excessive interest.
5: Get a Side Hustle
The logic of picking up a part-time job or gig work ranks among the best ways of how to pay off credit card debt. High personal debt usually means people are living beyond their current means. Injecting additional cash can help correct the revenue stream problem and provide extra money to pay down balances.
One of the other positive aspects of picking up side work involves lowering expenses. It’s difficult to make online purchases, go out to fancy restaurants, or spend money on frivolities while working. Instead, consider adding the positive revenue of a side hustle into a credit card payoff calculator and see how much faster balances fall and your potential savings grow.
6: Look into Debt Consolidation Solutions
There comes a point and time when assistance may be helpful in getting finances under control. Life is unpredictable! Sometimes economic hardships and unexpected expenses drive people to leverage credit cards in a way they would normally avoid. When the struggle to reduce credit card balances makes you feel like you’re shoveling sand against the tide, please ask America's Credit Union for help. We offer guidance, financial experts, and convenient, reliable solutions to help get your finances back on track.
Solutions such as securing a personal loan from ACU to pay off multiple credit cards and other outstanding balances allow borrowers to bring multiple bills under one manageable monthly payment while saving money on interest. Personal loans typically offer low-interest rates and relatively fast turnaround times, allowing you to get the money you need fast.
If you have equity in your home, a home equity loan is a great way to consolidate your outstanding credit card debt. Because the loan is secured by your home, the rates are affordable, and the interest is often tax deductible so be sure to consult with your tax advisor!
Depending on your specific situation, existing balances, and introductory offers, even the right low-interest credit card can provide a soft place for higher-interest accounts to land.
7: Know When to Ask For Help
It’s essential to take proactive measures to avoid accumulating unnecessary credit card interest. A good time to consider asking for financial assistance is when your credit card balances begin ticking up. This ranks among the early warning signs that even fiscally responsible people should reconsider their spending habits.
The good news is that your local credit union professionals are always available to lay out the best-suited options for your unique situation regarding the best way to successfully pay off credit card debt. Contact America's Credit Union for more information to see if a personal loan, home equity loan, or low-rate credit card might be the best solution to pay off your existing credit card debt.
For more tips on how to pay off credit card debt fast and get your finances back on track, review our "Debt Consolidation: Expectations vs. Reality" complete guide!
Membership in America’s Credit Union is open to anyone who lives or works in Dallas, Rockwall or Collin Counties, Texas, and their family members. Employees of select employers may also be eligible. See our Membership page for details.