Paying off my credit card debt was a long process. It taught me a lot about myself, my spending, my focus and ultimately my self worth. I talk more about my credit card story here, but when I finally made the commitment to get it paid off for good, I explored a few strategies to make it happen faster – and cost less in the process. 

Here are my top 5 ways to pay off your credit card debt faster.

1. Balance transfer

A game changer in my credit card debt journey was balance transfers. Balance transferring is exactly what it says on the tin – you transfer the balance of your credit card (or some of it) to another card with better conditions. In terms of paying off debt, balance transfers are beneficial in that by transferring the balance to a card with a 0% interest period, you can plough through your debt without interest being added on each month. 

Things to watch out for:

  • Check what conditions you have to meet to maintain the interest free period, and set reminders for your monthly payments. Often, missing a payment can void the interest free period, and leave you paying more in interest than before.
  • Balance transfer fees. When you transfer a balance, you usually have to pay a fee that’s calculated based on a percentage of your balance. It’s often worth it anyway for the interest you’ll save throughout the interest free period, but always double check.
  • Your credit rating. Everyone’s credit history is different, but applying for a balance transfer is just like any other credit – another application on your file. Multiple applications, failing to pay down the debt within the interest-free promotional period and whether or not you close your old accounts can all impact your credit score. Check your score regularly and before you apply for any credit. Ultimately, taking steps to pay down your debt will be a positive change in the long run, but short term damage to your credit rating could affect your lending capacity.

2. Realistic repayment planning

Debt pay off strategies touted by experts often involve ‘avalanche’ or ‘snowball’ methods that involve throwing all your money at your debt to pay it off as quickly as possible. While these certainly have merit and work well for some people, I personally couldn’t sustain that approach. 

My best strategy was to sit down and work out a regular amount that I could pay off without sacrificing every single thing in my life. It became my first priority after my mortgage when I got paid, but it wasn’t every single spare dollar I could find. I allocated spending money in the same way I allocated debt money. 

3. Take out a personal loan

One thing I looked into when I was paying off credit card debt, was taking out a personal loan to pay off the balance. The benefit here is that personal loans tend to carry lower interest rates than credit cards, so you can pay your debt down faster as you’re not racking up as much interest. 

Example: if you have $10,000 of credit card debt at a 15% interest rate, that’s costing you $1500 a year in interest. If you took out a $10,000 personal loan at 8%, that would cost you $800 a year in interest. Of course the interest would decrease as your balance decreases, but if you paid that same $10,000 off at the same pace, you’d get there quicker on the 8% loan.

Things to watch out for:

  • Loans are slightly more concrete in terms of repayments than credit cards, as there will be a set loan term. Only take out more credit in the form of a loan if you’re certain you’ll be able to pay it back in the remaining term.
  • Remember to close the credit card once you pay it off with the loan. If you keep it, you could end up even worse off and with more credit than before. 
  • In the same vein as a balance transfer mentioned earlier, a loan is an application for credit, which could have an impact on your credit score

4. Stop using the card

It sounds so simple, but it was something that tripped me up time and time again. I’d pay off something like $500 from my balance, and then tap the card for a sneaky purchase of $50 thinking it wouldn’t make much of a difference because I’d just paid that big chunk. But it did make a difference. It meant I was $50 further away from paying off the debt yet again.

Credit cards are often used when you’re trying to separate the short term adrenaline rush of a purchase from the long term consequences. When you tap your credit card instead of paying with real money, you’re essentially saying, ‘I want this, but I don’t want to take the responsibility for it right now’. 

Absorb this concept and remember it when you reach for your credit card while trying to pay off debt. Every time you use your card, you’re taking more and more steps away from being debt free. Leave it alone and enjoy your progress!

5. Funnel extra money where possible

While I said I wasn’t into the ‘all-in’ credit card debt pay off strategies, I do think combining a realistic repayment plan with any unexpected extra income will serve you well. I found that if I had any extra money come in or freed up (perhaps by not getting the train to work one week, or selling something on Facebook marketplace), I’d want to keep it for spending because I’d already met my commitment to my weekly amount. But, funnelling that extra income towards debt made more of a difference than I expected. 

Set your realistic regular payment, and then sweep any excess towards debt after you’ve lived your life without too much deprivation.

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Pay Off Your Credit Card Faster