“How to Tackle High-Interest Credit Card Debt: A Comprehensive Guide”

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Consumer Credit and Finance Education

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Strategies to Pay Off High-Interest Credit Cards

To pay off high-interest credit cards, avoid adding to your debt, explore strategies to lower your interest rates, direct more money to payments, and get expert help if you need it.

1. Try Paying With Cash or Debit

If you’re carrying credit card debt, your first step can be to pause your credit card usage and switch to using a debit card or cash instead. This will keep you from growing your balances—except for interest charges—and it may also make you more mindful of how you spend. The physical act of using cash, or the immediate impact on your bank account when using a debit card, could make you second-guess big purchases more often than using a credit card would.

2. Consider a Credit Card Balance Transfer

To make a balance transfer, you’ll move credit card debt from a high-interest card to one that offers a promotional 0% APR (annual percentage rate) period, typically 12 to 21 months. That means you can pay down debt without incurring more interest, as long as you pay off your debt by the time the promotional period ends.

3. Pay More Than the Minimum Amount Due

To get rid of debt, pay more than the minimum payment your credit card issuer assigns you. Your minimum payment is typically a percentage of your total balance, such as 2% to 4%, or a fixed amount of $25 or $35 if your balance is under a certain threshold. Making only your minimum required payment will typically keep you in debt for longer than you want.

4. Lower Your Expenses

To find more cash to put toward credit card payoff, look for ways to save money. If your cellphone bill is one of your highest recurring expenses, ask your provider if it offers new plans—even prepaid ones—that give you equivalent service for less money. Or limit how much you spend on food by batch cooking more meals yourself.

5. Increase Your Income

Aside from reducing expenses, you also can add to your income and put that money toward credit cards. Ways to increase your income include:

• Asking for a raise from your current employer or finding a higher-paying job
• Selling items you don’t use
• Requesting that your current job pay for a professional certification that can help you earn more money, or completing a free certification online
• Renting out your home or car when you’re not using it
• Leveraging your skills and work as a freelancer or consultant in your spare time

6. Pause or Cancel Subscriptions

A quick way to free up a fixed amount of extra cash per month is to audit your subscriptions and cancel or pause any you’re not really happy with. Take extra care to cancel any subscriptions that automatically renewed after a free trial. Check whether prices went up without you realizing it, and cancel or negotiate down the cost if possible.

7. Ask for Lower Interest Rates

You might have luck asking your credit card issuer for a lower interest rate. If you have a history of making on-time payments, and you’ve been a customer for a number of years, you’re more likely to get a positive response.

8. Pay Off the Card With the Highest Interest Rate First

If you have debt across multiple credit cards, the balance on the card with the highest rate will grow the fastest due to interest charges. Aim to pay it down first with any extra money you save or earn—an approach called the debt avalanche method. Once that balance is gone, you’ll apply extra money to the card with the next-highest interest rate.

9. Look Into the Snowball Method

Instead of taking the approach outlined above, you might decide that you would feel more accomplished paying off smaller balances first. These quick wins could motivate you to stay focused on your payoff plan. If this sounds preferable, use the debt snowball method. Instead of focusing on high-interest cards, you’ll pay off the smallest balance first, then apply extra money to the next-smallest balance, and so on.

10. Make Two Payments Each Month

Another way to reduce the interest you pay is to make more than one credit card payment per month. If you’re currently paying $50 a month now, try doubling it to $100, and try to make a payment each time you get a paycheck.

11. Consider Credit Counseling

You don’t have to develop a credit card payoff plan alone. A certified credit counselor at a nonprofit credit counseling agency can assess your debt and help you consider which of the approaches outlined here are best for you.

12. Automate Your Payments

Sign up for autopay with your credit card issuer if you haven’t already. This can ensure you don’t miss a payment, but it’s also a way to regularly pay more than the minimum. If your issuer allows it, you can set up a recurring automatic payment for a fixed amount per month. That can take into account all the changes you’ve made to your budget and the money you’ve decided to redirect to credit card payoff. You may even be able to split it up into a few payments per month to stagger the impact on your checking account.

13. Understand Your Budget

In order to allocate more money to paying off high-interest credit card debt, it’s crucial to know how much you’re earning and how much you’re spending—and in what categories. You can use this opportunity to make a precise budget, in which you choose a budgeting method that you follow closely each month.

Small Steps for Big Gains

If you’re feeling burdened by high-interest credit card debt, start small. Make a list of your debts first to understand your current circumstances, then pick just one payoff strategy to try. You can always add on another strategy, or switch approaches, later on.

The important thing is to get started. From the first day you pay extra toward your credit cards, you’ll limit the amount of interest you pay, and you can potentially improve your credit score by reducing your credit card balances. But maybe most importantly, you’ll feel empowered knowing you’re making an effort to live debt-free, at last.

For any mortgage service needs, call O1ne Mortgage at 213-732-3074. We’re here to help you achieve your financial goals!

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