During the holiday season, it’s hard not to get carried away buying gifts for family, friends, and even co-workers. But now that the holidays are over, you might find yourself in a sleigh full of holiday credit card debt on top of the debt you were already dealing with. If you’re feeling a bit of shopper’s regret and wondering how to pay off credit card debt fast, read on.
1. Make more than minimum payments
When you only make minimum payments, you’re just chipping away at a big mountain of debt that could take years to pay off and cost you thousands in interest. To avoid paying all that interest, you need to make more than minimum payments. Here are two strategies that could help you figure out how to pay off credit card debt faster and save more in the long run.
With the “avalanche method,” you use any extra cash you have each month to pay off the credit card with the highest interest rate first. Keep making the same minimum payments on your other cards while you focus on the highest interest card. After paying it off, simply move on to the next highest interest card and repeat the process. This way, you’ll start to pay more of what you actually owe instead of just keeping up with interest payments.
The “snowball method” focuses on paying off the credit card with the lowest balance amount first, while making minimum payments on the others. You can pay off individual cards faster by eliminating smaller payments, which leaves you with fewer accounts to worry about. After you’ve paid off the card with the lowest debt amount, move on to the next and work your way up.
Depending on how many cards you’re dealing with, and how much extra cash you’re able to pay, it could take months or years to pay off credit card debt this way. If you’ve taken on more than a couple thousand in credit card debt or can’t afford to pay more than the minimum, you might want to think about other ways of getting out of debt, like debt consolidation.
2. Consolidate your debt
Debt consolidation means combining all your high-interest debt into a single account with a lower interest rate. If you owe $5,000 or more in holiday debt, you may want to consider a debt consolidation loan or a balance transfer card. Keep in mind, though, that both these methods require a good credit score.
If you’re approved for a debt consolidation loan and qualify for a lower rate than you’re currently paying on your credit cards, you could save on interest and get out of credit card debt faster. If you don’t make your consolidation loan payments on time, however, you could end up in the same position you were to begin with.
Many credit card companies also offer a balance transfer card with a very low interest rate for a limited period. This could be a good strategy for those wondering how to pay off credit card debt fast, as long as you can pay the balance before the rate goes up. If you fall behind, you’ll end up paying fees on top of a higher interest rate once that promotional period is over.
3. Make and stick to a tight budget
For most people, expecting to pay off debt without making any lifestyle changes is unrealistic, especially if you want to get rid of it fast. Conversely, many people are surprised at how quickly they can make progress on their debt if they make short-term sacrifices for their long-term financial goals.
This approach starts with making a detailed budget–listing all sources of income as well as all monthly expenses. Then, take a hard look at what expenses you can cut out, from the small monthly subscription to the gym membership and restaurant costs. Maybe you can earn a little more money too, whether it’s through a side job or selling things you don’t need. You’ll be surprised at what all these efforts can add up to.
Enroll in a debt relief program
If, on top of your holiday debt, you’re dealing with a hardship that is making it difficult to even keep up with monthly minimum payments, you’re probably feeling especially overwhelmed after the new year. After all, knowing how to pay off credit card debt fast is one thing. Having the ability to do it is another. If you’re stuck with $7,500 or more in credit card debt, a debt relief program may be your best option.
In these programs, professionals negotiate with credit card companies on your behalf to help reduce the amount you owe. Using this method, you could end up paying significantly less money and be debt-free much faster than you would if you were making minimum payments. And fortunately, good credit is not required to qualify for one of these programs.
Learn about your debt relief options
If your debt is piling up and you need help figuring out how to get out of credit card debt, the Certified Debt Consultants at Freedom Debt Relief are here to help. We’ll review your situation, discuss your options, and help you find a solution that works for you. To find out if we could help you find a way to lower your credit card debt, request your free debt evaluation today.
- Budgeting 101: The Basics on How to Budget (Freedom Debt Relief)
- Why You Should Never Make Just the Minimum Payment on a Credit Card (Forbes)
- Debt Consolidation Programs (The Balance)
- 3 Vicious Cycles: Links Among Financial, Physical and Mental Health (Forbes)