3 ways to eliminate credit card debt
The best ways to pay off a credit card bill aren’t complicated - in fact, they’re all about common sense.
2019 was a banner year for U.S. credit cards – and credit card debt.
According to Experian, consumer credit card debt reached a record high of $829 billion in 2019. Overall consumer debt (including credit card debt) in the U.S. has grown 19 percent since 2009 to its current “record high” of $14.1 trillion, Experian reported.
Job one for American credit cardholders struggling with onerous credit card debt is figuring out the most efficient, effective, and easiest ways to pay down what they owe. By and large, that means chipping away at credit card debt. Here's are three credit card payoff strategies that work.
How to get out of credit card debt fast
1. Use a balance transfer credit card
Balance transfer cards allow you to slide from a credit card with a high-interest rate to a card with a lower interest rate, making it easier to reduce or even eliminate credit card debt. Use Credible's free online tool to compare cards currently available and find the one that meets your criteria.
PROS AND CONS OF BALANCE TRANSFER CREDIT CARDS
“If you're disciplined and dedicated (meaning you're not going to spend more money on credit cards, while you're paying off the debts), then a 0 percent balance transfer card with (a) zero balance transfer fee is your best option,” said Katy Mazzara, a certified financial coach at 168 Media, Inc. “If you don't qualify for a zero balance transfer fee card, then calculate how much the balance transfer will cost you. If it's a small fraction of what you owe, then it could be worth it. Look for 3 percent balance transfer fees, rather than anything higher.”
Credible can help you compare cards – including annual fees, welcome offers and required credit history – instantly and find the one that best fits your needs.
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2. Use the avalanche and snowball card repayment method
Mazzara uses two common credit card debt repayment methods – the “snowball” and “avalanche” card payment strategies.
“The snowball and the avalanche are names for methods of credit card debt payments,” Mazzara said. “Both start with writing down each credit card balance, interest rate, and payoff date. Then each method chooses one credit card to pay off first, while you pay the other cards' minimum balance.”
The difference is which credit card to use.
DEBT SNOWBALL METHOD VS DEBT AVALANCHE: WHAT'S THE DIFFERENCE?
“The snowball method chooses the lowest balance card, while the avalanche method chooses the highest APR card,” she added. “Basically, both methods use momentum to get the cards paid down quickly.”
3. Take out a debt consolidation loan
Consolidating debt through a personal loan like a home equity line of credit or other personal loans can be beneficial for individuals who hold a great deal of card debt. Credible can help compare personal loan companies (and hopefully land you some of the lowest rates for what you're looking for).
COMMON CREDIT CARD FEES AND HOW TO AVOID THEM
“Consolidating a loan can make it easier for individuals to stay up to date with their payments by putting all of their monthly payments into one payment,” said Karra Kingston, a bankruptcy lawyer with Karra L. Kingston Esq., in Staten Island, N.Y. “Many times debt consolidation loans can make it easier for individuals to pay off their debt. However, individuals need to have good credit to be able to take out loans.”
Know your debt levels and have a plan
Once a cardholder decides on a preferred card debt repayment strategy, craft a plan to pay the debt as quickly as possible.
“Users who struggle to handle their financial obligations should first make a list of all of their debt,” said Kingston. “Do so by pulling a credit report for free (financial consumers can get one credit report free once a year at freeannualcreditreport.com). Once the individual has an idea of how much they owe, make a separate list of all monthly expenses.”
Focus on paying the most expensive debt first – especially with credit cards.
COMMON CREDIT CARD FEES AND HOW TO AVOID THEM
“If possible, try to pay more than the minimum balance,” Kingston advised. “Most people who are struggling to pay their credit card debts are used to only paying minimums. Each month that goes by the debt incurs interest which can make it impossible to pay off debt.”
“By paying more than the minimum each month, cardholders can save hundreds or even thousands of dollars,” Kingston added. “Just craft a good household budgeting plan, be patient and stick to that plan. That’s the best way to pay off credit card debt.”