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Paying off credit card debt could be easier and faster if you carry credit card balances every month. You can easily do it by making a good plan and following it. Similarly, there are many fastest ways to pay off credit card debt, and considering those ways can not only free you from debt but also change your life and encourage you to grow ahead. Also, it will help you achieve your short-term financial goals.
What is Credit Card Debt?
Credit card debt is the amount a company owes for purchases made with a credit card. It reflects liabilities on the balance sheet. Credit card debt is a liability, meaning businesses must pay it within an operating cycle of less than one year.
The best way to pay off credit card debt is to cover the monthly amount to avert accruing interest.
Credit card debt is not secured, so the payment duration is short. If a company cannot pay according to the terms and conditions of the credit card you own, the supplier of these cards may ask for full repayment at a high-interest rate.
Now, let’s begin with some methods to pay off credit card debt fast.
11 Fastest Ways to Pay Off Credit Card Debt – Proven Strategies
1. Snowball Method
The snowball method lets you pay off credit card debts (first small and then move on to the big ones). Paying off debt in less time can be a great booster that encourages you to manage your finances and keep on track. Many people have used this method to pay their high, rising debts.
Minimum payment on each debt allows you to focus more on paying off your debts faster. Once you have paid all the debts, you will allocate money for the next-largest debt left to be paid in your list. Paying off debts with a snowball method increases as it follows the smallest-to-largest approach to clearing all liabilities.
2. Avalanche Method
If a person wants to clear all their debts quickly, start listing their debts in chronological order (from highest to lowest interest rate). Make the minimum monthly payment but keep all the extra amount in the highest-interest debt, known as the debt avalanche method of credit card repayment. Using the term “avalanche” here means you should pay off credit card debt which is most expensive debt first and then look for the cheaper ones.
Paying off the most expensive balance first is the cheapest way to clear all your debts, but you need to follow this method to save money, which makes it the fastest way to get out of credit card debt.
3. Credit Card Debt Consolidation
Credit card debt consolidation refers to getting a personal loan to settle debts. It is one of the most influential and fastest ways to pay off credit card debt and an excellent way to combine several lines of huge-interest credit card debt with stable monthly payments under a loan.
You can consolidate your debts by making a balance transfer. However, you should also consider taking out a home equity loan (if you are a homeowner) or a debt consolidation loan.
Debt consolidation can make it cheaper to pay off your debt only if the interest rate of the debt consolidation loan is less than the interest rates of credit cards. The Citi® Double Cash Card can play a significant role in paying off your debts faster.
4. Pay More Than the Minimum
Paying more than the minimum amount will help to clear your monthly credit card bill. If you pay more than the minimum amount on each card, the bank will not charge any additional late payment fees.
Paying only the minimum amount can make a cycle where your payments will cover your additional charges rather than reducing your balance.
A monthly credit card balance can increase your credit utilization rate (CUR), from which you can calculate your credit score. There could also be a certainty that once you surpass the available credit limit, your credit card may get suspended.
5. Convert Payment to EMIs
Converting your payments to EMIs during the purchase is one of the fastest ways to pay off credit card debt. If you don’t have money or have only some part of the amount with you at the purchasing time, you choose to pay the amount as a down payment. The rest of the amount can be converted into monthly installments.
Some retailers motivate customers who can opt for an EMI credit card as it is more convenient for them. Keeping this aside, the EMIs will be automatically deducted and reflected in your monthly bill statement.
However, banks always check eligibility before providing the EMI option to their customers because it is considered a bank loan.
6. Know Your Billing Cycle and Take Advantage of the Grace Period
The grace period for a credit card is the timeframe between the due repayment date scheduled and the date of the statement generation for your credit card according to your next billing cycle.
You can also understand this, as the bank issuing the card will not charge interest if you repay all the outstanding bills on or before the due date. Nevertheless, each credit card issuer has different or particular terms defining the grace period, which you should keep in mind.
7. Analyze Your Spending
Have you ever analyzed home expenditures? Where is my money going? Well, we must tell you that you’re not the only one who doesn’t know the answer.
But there is always time to start analyzing your monthly spending by noting it. Track your monthly expenses, like groceries, utilities, rent, etc., and see if there is any possibility of reducing costs with these expenses. If you cannot cut monthly expenses, move on to the following bucket list: impulse items like consumer goods and personal care items, which qualify more as wants than needs.
Taking a break from leisure activities like dining out, travel, and other unnecessary expenses for some time could be a wicked idea. Redirect all the cash you would need to spend on things you do not need towards clearing your credit card dues.
8. Create a Budget
When managing your debt, ensure you have a budget to understand your expenses and income. Creating a budget can help you avert debt while you work to pay what you already have.
Track your monthly income and expenses to examine your spending patterns. You can use budget apps like Goodbudget, YNAB, Pocketguard, and so on to pay off your debt.
Identify where you can navigate the extra or unnecessary spending toward the additional debt payments.
9. Use Savings
If the interest on your loans is higher than your earnings, it could be more efficient to use your savings to pay off your loans quickly. However, this is one of the fastest ways to escape credit card debt.
Keep some of your savings in your stash to handle emergencies or uncertainties. It’s necessary to save your present before securing your future to meet financial goals.
Your savings can be a massive source of emergency funds when you need them the most. That’s why it’s essential to start creating an emergency fund with a future perspective.
10. Consider a Credit Card Balance Transfer
A credit card balance transfer is a helpful opportunity for customers regarding the fastest ways to pay off credit card debt. It encourages customers to clear their credit card dues with a lower interest rate.
Various banks provide this facility, and some permit you to transfer the dues of different cards to a single transfer credit card balance.
Some banks require you to pay the interest rate first, and some may charge a processing fee. But you must choose to pay less quickly and without stress.
11. Start Making Cash Payments
If your primary goal is to find the fastest ways to pay off credit card debt, the last thing you should do is – switch to cash payments and avoid using credit cards.
One should stop using credit cards and start making cash payments, as they will prevent one from going into debt and making less spending. You need to develop a strategy and avoid unnecessary purchases to make yourself less likely to go into debt.
Is Anything Left?
Nothing can beat the essential factors like making cash payments, taking out a debt consolidation loan, and using the snowball and avalanche methods as the fastest ways to pay off credit card debt. Higher credit card debt can be challenging and sometimes impossible to overcome, so looking for different ways to pay off your debts becomes essential.
You can opt for any approach that suits and works best for you in any condition to keep you stress-free and away from debt.
Also, check out – How to Improve Credit Score Faster
