Having credit card debt, or any debt for that matter, is a stressful situation and it downright sucks. It's even worse working your ass off to get rid of credit card debt just to see interest charges eating up your progress.
Don't worry; you're not alone in this battle.
Now you may owe more, or you may owe less than that on your credit card(s), that doesn't matter. What does matter is that you figure out how to get rid of your credit card debt so that you can start living a happier, debt-free life.
This post is going to teach you how to rid of your credit card debt as fast as possible by keeping you motivated and showing you how you can get more money to put towards your debt each month.
You're going to learn some valuable things like which credit card to pay off first, why you shouldn't just pay the minimum on your debt every month, how to make some extra money to pay off your debt even faster, and more!
The 5-step, get rid of credit card debt system (I tried to make that sound cool, it didn't work):
- Step 1: Eliminate The Problem
- Step 2: Get Organized
- Step 3: Negotiate or Transfer
- Step 4: Plan Your Attack
- Step 5: Get Rid of Your Credit Card Debt Faster
How to Get Rid of Credit Card Debt Fast
Step 1: Eliminate The Problem
If you're in a boatload of credit card debt, the first thing you need to figure out is how you got into that debt. Once you figure that out you can begin working on eliminating the problem so that you don't increase your debt of fall right back into it after getting out.
Stop Using Your Credit Cards
If you want to get rid of your credit card debt fast, the first thing you need to do is stop adding to it!
This is obvious, but it isn't easy, so here are some tips to help:
- Unlink your credit cards from all services (Amazon, the app store, your favorite shopping sites, etc.).
- Possibly freeze your credit cards in ice (this is extreme but it works).
- Use the envelope budgeting system (cash) or a debit card.
Don't Spend Money You Don't Have
I imagine some of you read the last tip and thought: “Stop using my credit cards? HAH ya right!”
If you're one of those people here's what you should do:
First, you'll need a card with a zero balance, you may already have one but if you don't then use cash or a debit card until you pay off one of your cards. You don't want to add more to your debt.
Once you have a card with a zero balance simply use that card for all your everyday purchases and pay the balance in full every month.
I'll say it again:
PAY THE BALANCE IN FULL EVERY MONTH.
That is the key. Treat that card like a debit card. For example, if you're buying a $20 movie ticket, you better have $20 in your bank account already to pay the bank back (the paycheck that you get next week doesn't count).
If you follow those rules then you'll be able to reap the rewards of using a credit card without adding to your debt and paying interest.
If you're still having trouble you should take a look at your spending habits and learn how to stop wasting money.
Step 2: Get Organized
The next step to getting rid of credit card debt is to get organized with your finances. This step is really important because you'll figure out exactly how much you owe, and how much you can potentially pay off every month.
Create a Budget
The next step to getting rid of your credit card debt is to create a budget.
You need a budget because otherwise, you're just spending money and hoping you have enough at the end of the month to pay your bills.
When you have a budget you'll know how much you have to spend each month, and you'll be able to find any extra cash so that you can put it towards your debt.
If you want to get rid of your credit card debt fast, a budget is going to be your best friend. After you create your budget look it over thoroughly and try to find expenses that you can cut back on or remove completely. Paying off your credit card debt is a bit more important than that Spotify subscription (don't hate me for saying that).
Write Down Your Debt
If you're old school, get out a piece of paper and a pen. If you're like me, open up a google docs spreadsheet.
Then, write down all your credit cards, the amount you owe on them, and the interest rate. Like this:
Step 3: Negotiate or Transfer
This step involves either trying to negotiate a lower interest rate with your credit provider or trying to find a low APR card to transfer your balance to. If you have a lot of debt this step could save you a lot of money if you do it right.
Know Your Credit Score
Knowing your credit score is important for a lot of reasons, but right now all we care about is getting rid of your credit card debt.
So why is it important to know your credit score?
Well, it's going to help you with the next steps.
You may already have a way to check your credit score, but if not, try these free options:
- Borrowell (for Canadians)
- Credit Karma (US, Canada, UK)
- Credit Sesame (US)
Negotiate Lower Interest Rates
This is easy to do and it could save you hundreds or even thousands of dollars in interest over time. All you have to do is call up your credit provider and ask.
The 20-minutes it takes could save you thousands of dollars.
The worst that can happen is they say no.
Check this great post from TheSimpleDollar for tips on how to negotiate a lower interest rate.
Transfer Your Balance
If you can't negotiate a lower interest rate, it may be worth it to look around for a balance transfer opportunity. If you find a good offer you may even be able to use it as leverage to negotiate a lower interest rate on your current card.
So what is a balance transfer?
A balance transfer involves moving some (or all) of your credit debt onto a new card with a lower interest rate. Most balance transfer cards offer an introductory 0% APR (annual percentage rate) for 12-months or longer.
This can save you lot's of money in interest, here's an example of how:
You have $10,000 in credit card debt, and you're currently paying 15% interest every year. If you pay this debt off within 12 months at $903/month, you'll pay $831 in interest.
You find a balance transfer card offering a 0% interest rate for the first 12-months. If you pay off the $10,000 within the 12-month 0% interest period, you'll pay $0 in interest, saving yourself $831. Even if you pay a balance transfer fee which is on average, 3% ($10,000 x 0.03 = $300), you'll still be saving $531. Still, you should always try to negotiate any balance transfer fees.
Here are some useful resources if you want to learn more about balance transfers:
After you've decided whether or not you want to go for a balance transfer, check out these balance transfer credit cards to figure out which one will work best for you.
Step 4: Plan Your Attack
Now that you've hopefully negotiated a better deal with your credit provider, it's time to plan out how you're going to get rid of your credit card debt.
You don't want to pay the minimum on all your cards every month.
Why? Just look:
If you have $10,000 on an 18% APR card, and you pay a 3% minimum payment on that debt every month, it will take you (according to this calculator) over 20 years to pay it off! That's not even the worst part. Guess how much you'll pay in interest over that time?
Your life probably just flashed before your eyes with that terrifying example, but that's good. Now you know how important it is to pay more than just the minimum balance on your debt.
But how do you decide which card to target first? Well, there are two popular methods:
Highest Interest Rate Card (Avalanche Method)
This method involves paying off the card with the highest interest rate first. This method makes sense because you'll pay the least amount of interest.
So first, organize that list you made earlier from highest to lowest interest like so:
Once you know how much money you have to put towards your debt each month, pay the minimum for your lower interest rate cards, and then put the rest towards your highest interest rate card.
After you pay off one card, move on to the next.
Here's an example:
We have $800/month to put towards our debt, and we'll just say the minimum payment on cards A and C is $100 (your minimum payments will be different). In our case we would target card B first because it has a 25% APR:
After we pay off card B, we take the $600/month we were putting towards it and add it to card A's monthly payment. Like so:
We would keep going like this until we've paid off all our debt.
Lowest Balance Card (Snowball Method)
The next method is called the snowball method. You just throw snowballs at your credit card providers until they give in and forgive your debt.
If only it was that easy.
This method is called the snowball method because you target your card with the lowest balance first, then once you pay off that card you start paying off the next lowest balance, building up momentum like a snowball.
In other words:
The snowball method is exactly like the avalanche method except you target the card with the lowest balance first. Everything else is the same.
Use this method if:
You are motivated by quick progress.
Step 5: Get Rid of Your Credit Card Debt Faster
If you want to get rid of your credit card debt as fast as possible, every dollar counts. Paying just $50 extra every month can make a huge dent in your debt and save you tons of money.
Here's what I mean:
Say you have $5,000 on an 18% APR card and you pay $150/month. It will take you 47-months to get rid of the debt and you'll pay $1,983.60 in interest.
Bump that payment up to $200/month and you'll get rid of the debt in 32-months and pay only $1,313.96 in interest. Just $50/month extra saves you $669.64.
That's exciting, isn't it?
But how can we get more money to put towards our debt?
The first way is to go back to Step 2 and look at that budget (that you hopefully created). You should be able to find some expenses you can cut back on or remove.
Save More Money
There are things in your budget that you need to buy (e.g. groceries) so you can't just cut them out completely.
You can, however, save lots of money ($200+/month) on them if you know what you're doing.
- Ebates (Online & In-store cash back)
- BeFrugal (Online cash back, coupons, deals and more!)
- iBotta (Scan receipts and earn)
- Checkout 51 (Grocery store offers) ($5 sign up bonus) (full Checkout 51 review)
- Drop (In-store cash back, use referral code 222gz for 1,000 drop points ($1))
- Shopkick (Scan barcodes, visit stores, earn)
- Paribus (If you buy something and it's price drops, Paribus get's you a refund)
Trim Your Bills
If you've never heard of Trim, then you're in for a treat.
Trim is an A.I. robot that saves you money automatically. Trim can even negotiate your bills for you!
Yes, Trim can automatically contact your cable, internet, or cell phone service provider and try to negotiate a lower bill.
Add Some Income
One of the best ways to pay off your credit card debt faster is to add more income to your budget, this can be done through side hustles.
- Swagbucks ($5 sign-up bonus) (full review)
- InboxDollars ($5 sign-up bonus)
- Vindale Research ($2 tutorial survey) (Earn up to $50 per survey)
- Toluna (Awesome community)
- MyPoints (Earn $5 after you take 5 surveys)
- Pinecone Research ($3/survey, no minimum payout!)
Bonus: Become part of the Nielsen Computer & Mobile Panel and earn money just for leaving an app on your phone.
You should be able to earn an extra $200-300/month filling out surveys part-time. Imagine how much faster you'd get rid of your credit card debt with an extra $200/month.
PS: Sign-up for multiple sites because some will work better for you than others and you'll get more potential offers. Check out my post 13 Survey Sites That Pay Cash for more sites and tips on how to improve your earnings.
If you want to see more side hustles, just check out my Make Money page.
After You Get Rid of Your Credit Card Debt
Your credit card debt is gone and you feel amazing. Congratulations! This is a time to celebrate.
But what's next?
Well, if you followed some of the advice in this post to get rid of your credit card debt, you've likely built some new (awesome) habits.
Maybe you've grown to love your budget, maybe you started a side hustle, or maybe you're using some of the apps above to save yourself some money. Maybe you're doing all three of those things!
Stick to them. This will be your key to staying out of debt.
Other than that, just remember this feeling every time you pull out your credit card. Remember how good it feels to be debt free, and pay off that credit card balance every month!