Whether you owe a few hundred dollars or a few thousand, it can feel like a burden to have credit card debt hanging over you. It's no one's goal to get further into debt, and it's likely that you've thought of ways to get rid of that credit card debt once and for all.
What ways are most effective? How can you manage to fit more aggressive payments into an already-tight budget? Learn the methods used by money experts and average consumers alike, and see how it's truly possible to finally pay off credit card debt.
5 ways to pay off credit card debt
1. Pay off the most expensive debt first
For many, it makes sense to pay off the credit card with the highest interest rate first since it's costing you the most in lost money as interest. This is also called the debt avalanche method.
To make the method work, look at all of your credit cards, ranking them from highest annual percentage rate (APR) to lowest. Continue making the minimum monthly payments on each card, but with any extra money you have in a month, put it toward the card at the top of the list (with the highest interest).
It may take you some time to see progress since this may not be your smallest debt. You will see the average monthly interest amount you pay get smaller and smaller. Then, the money that you aren't spending on interest can be applied to the principal, helping you slowly but surely get out of credit card debt.
2. Pay off the smallest debt first
Some people may get frustrated by how long it takes to pay off a large credit card debt and could need a method more immediately gratifying to stay motivated. That's the goal of the snowball method, which attempts to pay off the smallest credit card first so that you can have the satisfaction of getting it out of the way and seeing that $0.00 balance on your statement every month.
Over time, you would move to the next smallest balance, and then the next, and so on. With this method, you would have more money to put toward paying off the next account each month because you no longer have the minimum monthly payments of those paid-off cards to worry about.
This method doesn't take APR into account, so it might not save you the most money in the long run. However, for people who need to see that their efforts really do pay off, it can be just what they need to start tackling debt in a systematic manner.
3. Use the snowflake method
A method that can apply to either the avalanche or snowball method is the snowflake method. This requires you to save as much as you can in small, incremental amounts each day so that you can use it to pay off debt. You may also try to make extra income in small amounts for the same purpose.
Whether you put your change in a jar on your dresser, pause your streaming service subscription for the summer, or sell a few unused pairs of designer jeans online, the extra money you accumulate would be put toward debt. A slightly larger payment each month, no matter if you use it for the highest APR credit card or the smallest, will make a difference over time. Even small payments can really add up!
4. Make multiple payments
Another effective way to pay off credit card debt is to make as many payments as you can in a month, no matter when your payment is due. For people who get paid more than once a month, this strategy can be very effective. Suppose you get paid on the 1st and 15th of the month, but your credit card isn't due until the 20th. You may wait to use the money left from your check on the 15th to pay some of the balance. By also putting money from your check on the 1st toward it, you'll pay it down even faster.
Why don't people always do this? They could mistakenly believe that the small amounts they put on a card balance won't make much of a difference. They may hate paying bills because it reminds them of their debt, and so they wait to only do it once a month. Still, others may intend to put much more toward that single monthly payment, then end up spending that extra money on other things. By paying small amounts as you can, you will ensure the money you do have available gets put on credit card debt instead of things you really don't need.
This strategy works well in conjunction with the snowflake method, too. If you sell some old books at a garage sale and have an extra $20, why not put it on your credit card balance? Most creditors will let you make as many monthly payments as you want with no penalty. By paying that $20 on the 1st of the month instead of waiting until the 15th, you won't pay interest on that money for those 14 days either. It's a win-win for people who want to make small steps toward a big debt payoff.
5. Automate your payments
Finally, many people have good intentions and simply get distracted or busy. Missing a monthly credit card payment (even by accident) can be very expensive, triggering late fees of $15 to $50. This fee sets you back on your debt repayment goals, which can be very frustrating to someone who is working hard to pay down debt.
Instead of risking a missed payment, set up automated payments from your bank account. You can usually choose the day of the month to schedule it for, as well as whether you want to pay the minimum monthly amount or something more. If you aren't sure how much money you'll have each month to put toward debt, set up the automated payments for just the minimum. Then, use our tips above to make additional payments throughout the month manually. This will help ensure you have all your bases covered.
Why you should pay off credit card debt
Maybe you're not convinced that credit cards are a priority, and if you have multiple financial obligations, it may not even be the most important bill you have to pay this month. However, paying down your cards has multiple benefits, including:
Leaves more room on your card for an emergency
Reduces the amount you spend on interest
May help you have a higher credit score since total amounts owed are a factor
Gives you confidence that you are handling your finances in a healthy way
Frees you up to take on important debt down the road, such as a home mortgage
Having credit card debt can sometimes feel like a huge challenge to overcome, but it is possible! Just be realistic about how much you owe, and set a strategy for paying it down.