Here Are 5 Ways to Pay Off Credit Card Debt

If you’re trying to figure out how to pay off credit card debt, you’re in the right place. I’m sure you already know it’s a daunting task. But all you need for success is a solid plan of action.

You’ll also need persistence and self-discipline to get rid of your credit card debt. But once you see your balances start to shrink, you’ll get a rush of excitement that will help you stay motivated.

Before you can choose a strategy, you need to gather information about your credit card debt. Make a list of your credit cards, including the interest rates and the current balances. Also, have a good idea of what your credit score is. Many of the major issuers offer a free credit score to their cardholders. There are even some issuers, including American Express and Discover, that offer free scores to everyone, whether you’re a cardholder or not.

Depending on the specifics of your debt situation, one of the following five debt elimination strategies should help you pay off credit card debt:

If you still have very good credit, you might qualify for a balance transfer card. These cards offer a 0% introductory annual percentage rate for a period of time, such as 12 to 18 months. This gives you a chance to pay off your debt while paying no interest.

But if you don’t have a high enough FICO score to qualify, then you can consider a debt consolidation loan.

If you have multiple credit card balances or different types of debt, you can combine them into one installment loan. With a debt consolidation loan, you won’t get a 0% interest rate, unfortunately, but you’re likely to get a rate that’s lower than the APRs on your credit cards.

This is considered a personal loan, and if you have fairly good credit, you might get approved. Do shop around, though, and get the best rate you can qualify for.

Another personal loan option is to use your home equity for a line of credit to pay off credit card debt. It’s likely that the interest rate will be lower than what you’re charged on your credit cards.

If you decide to tackle your debt on your own, one option is called the debt avalanche. You pay off your credit card balances from the highest APR to the lowest APR. The best feature of this method is that you save the most money because you’re getting rid of high-APR debt first.

What if you need to get a quick psychological hit to stay motivated? Then try the debt snowball method. Here, you pay off your balances from the smallest debt to the largest debt. You’ll pay more interest this way, so that’s a significant weakness in this approach.

But I want you to choose the approach that you will stick to. If the snowball method works for you, then go for it! And just so you’re aware, it’s possible to combine the avalanche and the snowball methods and turn that into a blizzard.

If you believe you can pay off the debt by using one of the options listed above, then choose your strategy and get going. But what if your debt is insurmountable? If you feel like you’re drowning in debt and have no hope of having enough money to get rid of it, then consider reaching out for help. Speaking with a credit counselor from an agency accredited by the National Foundation for Credit Counseling will help you clarify what you need to do next.

If things are so bad that you don’t believe you can ever climb over your mountain of debt, consider reaching out for help. You don’t have to go through this crisis alone.

You can find an accredited credit counseling agency through the NFCC. You’ll get a free phone session, in most cases, to help you choose the best debt-reduction option. You’ll learn what your best options are, and that will help give you direction.

Just in case you’re concerned that credit counseling will lower your credit score, you can stop worrying. Simply asking for help will not impact your credit score. Now, if you eventually decide to go into a debt management plan or file for bankruptcy, your score will go down.

But the most important thing right now is to stop the madness. You’ll get back on your feet, and, with time, your credit score will recover.