App version: 0.1.0

Paying Off Credit Card Debt: How to Pay Off Credit Card Debt Fast

Paying Off Credit Card Debt: How to Pay Off Credit Card Debt Fast
Jason Steele
Jason SteeleUpdated March 22, 2022
Share this article:
Editor’s note: Lantern by SoFi seeks to provide content that is objective, independent and accurate. Writers are separate from our business operation and do not receive direct compensation from advertisers or partners. Read more about our Editorial Guidelines and How We Make Money.
Paying off credit card debt may seem like a daunting task, but it is possible. While there’s no quick-fix solution to getting out of debt, there are a few strategies and methods to do it quickly and efficiently. In this article, we’ll explore potential options for how to pay off credit card debt, including:
  • The debt snowball method
  • Credit card consolidation loans
  • Balance transfer credit cards
  • The debt avalanche method
We’ll also look at other strategies you could explore — even things as simple as trying to spend less or making extra monthly payments — to help you determine the best way to pay off credit card debt for your situation.

What Is Credit Card Debt?

Credit card debt is an outstanding balance that you owe to your credit card issuer on an unsecured, revolving credit card loan (all important credit card terms to know).Since credit card accounts are revolving loans that stay open indefinitely, it can be easy to keep adding to your balance each month. Plus, it’s possible to open multiple credit card accounts — sometimes with relatively high credit limits — which can make it possible to lose track of your spending and get in over your head. That situation can compound as interest continues to accrue on the unpaid balances each month.

Why It’s Important to Stay Out of Credit Card Debt

Debt is one of the things that affect your credit score, which is why it’s important to minimize or eliminate your credit card debt. Credit cards often have high interest rates, so once you get in debt, it can quickly spiral and become a large and overwhelming amount. The best way to prevent credit card debt from getting too large is to pay off your balance in full each month after you review your credit card statement. This way, you’ll avoid racking up interest charges on money you still owe.

Methods for Paying Off Your Credit Card Debt Fast

If you do find yourself in credit card debt, there are methods for paying it off. These methods generally focus on either paying off each debt individually or consolidating all of your outstanding balances into a single monthly payment. There are pros and cons to each method. Ultimately, the best way to pay off credit card debt depends on what works for you.

1. Debt Snowball Method

The debt snowball method focuses on paying down the account with the lowest balance first. While you’re making larger payments toward the account with the lowest balance, you continue to make the minimum payments on your other accounts. For the debt snowball method to work, you must put as much extra money as you can toward the lowest balance account until that balance reaches zero. Then, put the money you were using to pay off that balance toward the account with the next-lowest balance. Continue until all debt is repaid. For example, if you have three credit cards with balances of $400, $1,000, and $9,000, you would pay off the card with the $400 balance first while continuing to make the minimum payments on the $1,000 and $9,000 balance cards. Once the $400 balance was paid off, you’d focus on the $1,00 balance. Then, the $9,000 balance.The debt snowball method can be an effective strategy for people who like to see immediate progress and would lose motivation if they didn’t start to see results. Since the account with the lowest balance will probably get repaid rather quickly, it can feel like an immediate win. This can motivate you to continue to work toward paying off other debt. However, with the snowball method, you may end up paying more interest over time. If your larger debt accounts have high interest rates, you may pay more in interest with the snowball method than you would if you focused on paying off debts with the highest balance first. 

2. Credit Card Consolidation Loan

Credit card consolidation is another method for repaying credit card debt. With a credit card consolidation loan, you combine multiple account balances into one loan with a single monthly payment. Credit card consolidation ideally results in a loan with a lower interest rate than the average rates of your previous loans.If you qualify for a lower rate on a debt consolidation loan, you can save significant money over time on interest. Plus, it can be simpler to make one monthly payment, rather than having to remember to make multiple payments each month.However, you have to qualify for a debt consolidation loan based on your credit history. If you qualify for a loan with a higher interest rate or a loan that is too small to cover your existing debt, then credit card consolidation may not be a good option for you.  

3. Balance Transfer Credit Card

A balance transfer credit card allows you to transfer existing balances from other accounts. If you qualify for a card that offers a 0% introductory balance transfer annual percentage rate (APR), then you can save money on interest. If you can pay off your balance before the introductory period ends, you can avoid paying interest altogether. Transferring your balances to one card also consolidates your debt, meaning you have fewer different monthly payments to make. However, if you make a late payment, your introductory financing offer can be revoked. Also, after your promotional period ends, any remaining balance will accrue interest at the card’s regular balance transfer APR, which can be quite high. Keep in mind that your credit generally will still need to be in decent shape in order to qualify for 0% APR offers; those with severely damaged credit may be limited to secured credit cards.You’ll likely have to pay a balance transfer fee as well, which is typically 3% of the amount transferred. Finally, you cannot transfer a balance above the card’s credit limit. If the amount you transfer is nearly your entire balance, it can negatively affect your credit score. This is because your credit utilization rate will be high. Some lenders may also charge over-the-limit fees.

4. Debt Avalanche Method

The debt avalanche method focuses on paying the debts with the highest interest rate first. While you’re making larger payments toward the account with the highest interest rate, you continue to make the minimum payments on your other accounts. For the debt avalanche method, you put as much extra money as you can toward the highest interest rate account until that balance is zero. Then, put the money you were using to pay off those accounts toward the account with the next-lowest balance. Continue until all debt is repaid.For example, if you have three cards with credit card interest rates of 26%, 19%, and 13%, respectively, you would pay off the card with the 26% APR first while continuing to make the minimum payments on the 19% and 13% APR cards, too. Once that was paid off, you would focus on the 19% APR card and then the 13% APR card. The biggest advantage of the debt avalanche method is that you save money on interest. However, using the debt avalanche method means it can take a while to pay off your first loan. If your account with the highest interest rate has a large balance, you may not feel a sense of accomplishment for many months or years. This can be discouraging for some people who may lose motivation more easily. 

Comparing Ways to Pay Off Credit Card Debt

Determining how to pay off credit card debt is a personal decision. Consider the following factors of each method to decide which seems like the right approach to paying off credit card debt for you.

Other Strategies to Pay Off Credit Card Debt

If you’re focused on how to pay off credit card debt fast, it’s wise to consider all your options. In addition to the previously mentioned methods for paying off credit card debt, here are a few other strategies to consider. 

1. Minimize Spending

The easiest way to pay off debt is to put more money toward your debt. And the easiest way to do this is by finding ways to minimize spending. Although it’s not fun, it’s important to cut back when trying to pay off credit card debt fast.

2. Make Extra Monthly Payments

An important thing to realize when it comes to how to use credit cards is you don’t have to wait until your payment due date to make a payment. Rather, you can make more than one payment each month. Credit card interest is calculated based on your account’s average daily balance, and it’s compounded daily. So, every day that you wait to make a payment means more in interest charges.Making extra payments throughout the month can also help you avoid overspending on other things, and help prioritize paying off debt. However, always check that you have made the minimum monthly payment by the time of the due date to avoid late charges and penalty rates. Note that the minimum monthly payment must be paid after the statement is generated, or it won’t count toward that statement. 

3. Seek Professional Help or a Credit Counseling Service

If you’ve tried other methods and nothing seems to be working, then you could try seeking professional help or a credit counseling service. Nonprofit credit counseling services can offer financial literacy education and help you evaluate your credit card debt and entire financial situation. Some will even negotiate with credit card companies for a lower interest rate on your debt, or help you explore options like credit card debt forgiveness.Note that credit counseling is often a requirement before filing for bankruptcy, which should be considered a last resort.

Compare Credit Cards With Lantern

Dealing with debt isn’t fun, but it’s easier once you know wow to pay off credit card debt. Strategies to consider can include the debt snowball and avalanche methods, as well as credit card consolidation and balance transfer credit cards. Really, the best way to pay off credit card debt will be the method that works for you.Once you’ve paid off your debt, you’ll be on your way to rebuilding your credit and your financial habits. Lantern by SoFi can help you compare credit building cards if you’re ready to take that step.
Photo credit: iStock/Eva-Katalin The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website on credit (https://www.consumer.ftc.gov/topics/credit-and-loans)*To check the rates and terms you may qualify for, SoFi conducts a soft credit pull that will not affect your credit score. A hard credit pull, which may impact your credit score, is required if you apply for a SoFi product after being pre-qualified.SOLC1221050

Frequently Asked Questions

What happens to your credit score when you pay off your credit card debt?
What does debt snowball mean?
What happens if you have too much credit card debt?

About the Author

Jason Steele

Jason Steele

Jason Steele has been writing about credit cards and award travel since 2008. One of the nation's leading experts in this field, he has contributed to dozens of personal finance and travel outlets and has been widely quoted in the mainstream media.
Share this article: