How to Pay Off a Credit Card Fast: 4 Great Tips

How to Pay Off a Credit Card Fast: 4 Great Tips

Posted on August 23, 2022

If you’re trying to save for a down payment or want an auto loan but have a high credit utilization ratio, paying off credit cards is key. It isn’t easy though as credit card debt is expensive and can seem like it’s never ending. We asked our Waterloo auto loans team to outline 4 simple ways to pay off credit card debt faster. This is what they suggest.

Paying off credit cards faster

Before we get to the tips, check the interest rates on all your cards. Order them all in interest rate order with the most expensive at the top of your list.

Prioritize paying off the most expensive credit card first while working your way down the list. Maintain minimum monthly payments for all cards but prioritize extra payments in order of interest.

Then lock the credit cards away so you can’t use them. These tips will only work if you cut right back on your spending.

Save and pay

The first method to pay off credit cards is to make savings from your outgoings and use all the excess cash to pay down the credit card.

This will take a while and will require some cutbacks but is the easiest and lowest effort way to pay down credit cards faster.

Save everything you don’t spend that month and then add it as a lump sum payment to the balance of the most expensive credit card. Rinse and repeat until it’s paid off.

Balance transfer

The balance transfer method can be used alongside some of these other tips for extra benefit.

Find a 0% interest card or balance transfer card with low fees. Transfer all your credit card balances to that card. If they won’t all fit, prioritize the most expensive cards.

Pay off the 0% card as quickly as you can while maintaining minimum payments on all other cards.

Once the 0% payment period is almost up, switch to another balance transfer card and repeat until all balances are paid off.

Consolidation loan

If you owe a lot on credit cards, refinancing your auto loan to pay them all off is a cheaper way to get out the debt.

As long as you have a good credit score and equity in your car, you can refinance your current loan if you have one and borrow extra cash to pay off the credit cards.

This will only work if you can pay most, or all, your credit card debt with the loan. If you can only clear a portion of them, this method isn’t quite so effective.

Negotiate with the credit card companies

If you’re genuinely in trouble and think you may default on a payment, you can negotiate with credit card companies for a lower interest rate.

This only works when you’re genuinely in trouble and will reduce interest, not remove it. It’s actually in the credit card company’s interest to agree as at least they’ll get a portion of something rather than all of nothing.

Plus, you have nothing to lose by asking!

When you’re ready for a car lease or loan, get in touch with the Waterloo auto loan experts at Northway Ford for great deals on auto finance.

Thanks for reading. Be sure to connect with us on Facebook, Twitter, Instagram, or LinkedIn to stay up to date on our latest great articles!