How Do You Pay Off a Credit Card?

Paying off a credit card can feel incredibly difficult at times, especially if you have a lot of debt; however, with the right amount of planning and perseverance, no amount of debt is impossible to conquer. 

Throughout this article, we’ll take a look at some of the major steps that you can take in order to tackle paying off credit card debts. We’ll also look at some general tips and knowledge that can aid you in your endeavors.

The 5 Steps to Efficiently Paying Off Credit Cards

Although credit card debt situations vary from person to person, you can generalize the method of taking credit card debt head-on. Here are some of the major steps that you can take in order to make credit card debt a thing of the past.

Step 1: Assess your debt situation - Every person’s debt situation is different. Some people may have a small, revolving amount of debt each month. Others may have tens of thousands of dollars of debt that have built up over the years. Some people may have debt on just one credit card. Others may have debt on multiple credit cards.

Whatever your situation is, the first thing that you can do is analyze it completely. This means that you should know exactly how much debt you have in total as well as how fast your debt is growing. If you have different credit cards, be sure to know all of the different rates. Know the different policies and due dates as well. Especially if there is a lot going on, it can be difficult to manage everything at once. However, if you want to successfully pay off your credit cards, you have to understand everything there is to know about how your debts are growing and changing.

Step 2: Come up with an in-depth plan - Once you have analyzed your credit card debt situation, the next step is to create a game plan. This plan should have a specific timeline that estimates when exactly you are going to pay off certain debts. Creating tools like a master calendar where you write down exactly which days of the month payments will be made can be very helpful in these situations.

If you are taking on multiple credit card debts, some aspects of planning that you should consider are which cards to prioritize first and whether or not you can consolidate your debts together (which we will talk more about later).

If you are taking on just a minor amount of credit card debt, part of your planning could be to quantify exactly how aggressive you are going to be every month in paying off your debt. By having a clear plan, you will alleviate yourself of stress and also motivate yourself to take on a potentially daunting task.

Step 3: Budget, budget, budget! - Budgeting is going to be the biggest player in paying off your credit cards. In fact, budgeting is also the key player in making sure that you don’t fall into heavy debt in the first place.

If you are planning to make paying off your credit cards a priority, then your regular budget will also need to reflect that. If you don’t already have a set budget that you use every month, now is going to be the perfect time to create one.

When creating a budget, you should categorize all of your spendings first. Some example categories would include food and groceries, entertainment, bills, travel, etc. One of the categories that you will have to include now is credit cards. By organizing your spendings into different categories, you can now physically prioritize categories by importance and allocate money respectively. If you can budget money towards paying off credit cards while cutting away from other categories that aren’t as important, then you’ll be one big step closer to cutting out credit card debts completely.

Step 4: Refinance if necessary - If your credit card debts are growing too fast for you to keep up with due to the high-interest rates, considering options to refinance could be a great possibility. Refinancing means moving your debts around to try and get the longest time and lowest interest rates for paying them back. In other words, it means paying off debts with another type of loan, then paying off that new loan.

Two possible ways to refinance debts are to use balance transfer credit cards or personal loans. Balance transfer credit cards allow you to literally transfer other credit card debts to a new card. This could be advantageous because balance transfer cards come with a promotional 0% APR period, which means your debts won’t accumulate a single penny of interest as long as you make your payments on time. These 0% APR periods can last up to as long as 20 months, and you can find a list of some of the best balance transfer cards here. On the other hand, personal loans don’t have a 0% APR period; however, the interest rates on personal loans are generally lower than those of credit cards, meaning paying off a personal loan instead of a bunch of credit card debts could be more feasible.

Step 5: Crush it - Now that you know the other steps towards tackling credit card debt, the final step is to just crush it. Use all of the perseverance that you have in order to motivate yourself to pay off your credit cards—you can certainly do it, so don’t ever give up.

5 Tips to Know While Tackling Credit Card Debt

In addition to the major steps of defeating credit card debt, here are 5 general tips and pieces of knowledge that can prove to be helpful when trying to pay off your credit cards.

Tip 1: Target the card with the largest interest - This tip should make sense. If you have multiple credit cards that have debt, targeting the credit card with the highest interest rate would be the most effective move. This is because the credit card with the highest APR will grow your debt the fastest, and nullifying it as soon as possible will be beneficial to you.

Tip 2: Pay off the smallest credit card balance first - Sometimes your credit card with the highest interest rates might actually have the highest balance of debt. You might have other credit card balances that are significantly smaller. In this case, paying off the smallest credit card balances while maintaining minimum payments on your other cards could be an effective strategy for you. This is because by doing so, you’ll be helping yourself reach a tangible goal in paying off debt that can really motivate you to crush the other debts that you have to face. In whatever situation you are in, balance this tip along with Tip 1 in order to develop the most effective strategy for yourself.

Tip 3: Always pay more than the minimum - If you can, you should always strive to pay off more than the minimum payment required every month. You should always strive to pay off more. Otherwise, you’ll let interest rates balloon your debts to unfair proportions. Paying off more than the minimum is always good advice, even if you don’t have significant amounts of debt.

Sometimes, you might feel like you can’t pay more than the minimum amount. In that case, the best thing that you can do is to revisit your budget and see if there is any way for you to allocate more to pay off credit cards. Every bit counts.

Tip 4: Consolidate your balances - If you have more than one credit card that needs to be paid off, it can be difficult to manage all of the payments that you can make. This could result in you forgetting to make certain payments, putting yourself even further into debt.

Consolidating your balances could be a great way for you to gain focus on paying off debts. As mentioned before, you can do this by transferring credit card debts to a single balance transfer card or by using a single personal loan to pay off all of your current credit cards. 

Tip 5: Create small checkpoints for yourself - Last but not least, one of the most helpful things that you can do for yourself when paying off your credit cards is to create mini goals and checkpoints for yourself. For example, if you had $30,000 in credit card debt, you could split that up into six checkpoints of $5,000 each. That way, every time you hit a checkpoint, you can motivate yourself even more to reach that final goal. Checkpoints make you feel like you are actually getting closer to achieving your goal, and when it comes to something as important as paying off debt, they are extremely helpful.

Closing Encouragements

If you are struggling with credit card debts, you are definitely not alone. There are literally millions of other people who are in similar situations as you are, and all of you capable of paying the debt off. It simply takes determination, planning, and action, things that every single person is capable of implementing into their lives. If you can conjure up the motivation and ability to pay off your credit card debt, then there is pretty much nothing else that won’t be able to accomplish. Take it step by step, and you could become debt-free before you know it.