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How to Pay Off Credit Card Debt

Last Updated: October 25, 2024
4 min read
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Key points about: paying off credit card debt

  1. You can use a balance transfer credit card to pay off higher-interest debt.

  2. Another option for paying off a credit card is a personal or home equity loan.

  3. Factor in the interest rate of your debt when deciding whether to pay off credit card debt fast or over time.

Paying off credit card debt can save you money on interest. While it might feel like a tall order when you’re on a lean budget, there are ways to pay off your credit card debt even if you don’t have the cash on hand. Let’s take a look at how to pay off credit card debt.

What’s the best way to pay off credit card debt fast?

If you’re curious about how to pay off credit card debt fast, here are a few approaches to consider.

Transfer high-interest debt to a low intro APR credit card

You’ll benefit the most from a balance transfer if you can pay off the entire balance before the intro offer ends and the standard APR applies. However, you’ll typically have to pay a balance transfer fee, which is a percentage of the amount you’re transferring. Before making the decision to transfer high-interest debt to a balance transfer card, you’ll want to find out the balance transfer fee and review your finances to determine whether you can pay off your balance within the introductory period.

A balance transfer credit card with a low introductory APR could offer you some relief from credit card debt, but only when managed responsibly. As long as the introductory period is in effect, you might have smaller payments because your balance isn’t accruing as much interest.

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Pay off your credit card with a loan

Depending on your credit history and credit score, you might consider paying off credit card debt with a personal loan. If you’re a homeowner, you might also qualify for a home equity loan to pay off your credit card.

Both are types of installment loans. This means you’ll receive a lump sum, and will need to keep making a monthly payment until you've completely repaid the loan amount plus any interest it has accrued. If you're struggling to manage multiple credit cards with different interest rates, you might also treat a personal loan as a debt consolidation loan. Covering one monthly payment with a fixed interest rate may be easier than paying each individual credit card bill.

If a loan has a lower interest rate than your high-interest credit card debt, it can save you money in interest. Make sure to calculate any fees and interest from the new loan, and see how it stacks up against what you’re paying on your credit card.

 

While a longer repayment period usually means smaller monthly payments, if you lengthen your loan term, you usually end up paying more in interest. But make sure you don’t accumulate more credit card debt if you choose to pay off your credit card with a personal or home equity loan.

Do you always need to pay off credit card debt aggressively?

Paying down debt aggressively can reduce the amount of interest that will accrue on your account. Every situation is different, so you should consider the terms of your account, the interest rate you’re paying, and other financial goals—such as building an emergency fund or saving for a wedding or a down payment on a home.

You may also consider a few debt repayment budgeting strategies to help you tackle credit card debt over time.

 

The debt avalanche method, for example, involves paying off your highest-interest-rate debt first, then moving to the next highest-interest debt, and so on. On the other hand, the debt snowball method involves repaying your smallest debt first, then moving to the next smallest, and so on. In both of these strategies, it's vital to continue making your minimum payment across all credit card bills. Each late fee sets you back on your debt repayment goals.

Did you know?

If debt has hurt your credit score and you want to develop healthier habits, a secured credit card may be able to help you build your credit with responsible use.1 You secure the card with a deposit, making it easier to qualify with bad credit.

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If debt relief still seems impossible, remember you don't have to face it alone. Your bank or credit union may offer credit counseling. With your specific circumstances in mind, a credit counsellor may help you find the best tools for managing your credit card debt.

 

Knowing your options for how to pay off credit card debt can help you make an informed decision.

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  1. Build credit with responsible use(Secured): Discover reports your credit history to the three major credit bureaus so it can help build/rebuild your credit if used responsibly. Late payments, delinquencies or other derogatory activity with your credit card accounts and loans may adversely impact your ability to build/rebuild credit.

  • Legal Disclaimer: This site is for educational purposes and is not a substitute for professional advice. The material on this site is not intended to provide legal, investment, or financial advice and does not indicate the availability of any Discover product or service. It does not guarantee that Discover offers or endorses a product or service. For specific advice about your unique circumstances, you may wish to consult a qualified professional.