From choosing the right repayment method, to finding ways to increase your income, these steps will pave your way toward a debt-free future and financial freedom. Let’s get to it!

1.    Choose a Strategy

If you pay the minimum payments on your credit cards, you may end up owing way more than you originally spent.

Let’s say you have a $1,000 balance on a credit card that’s charging you an 18% annual interest rate with a $25 minimum monthly payment. If you pay only the minimum amount, your balance at the end of two months will already increase to $1,030.23. You read that right – you will owe more than two months prior!

Instead, choose one of the following strategies to make sure you truly put a dent in your credit card debt.

Debt Consolidation

Those with multiple high-interest credit card balances may benefit from debt consolidation. Debt consolidation streamlines multiple debts into one simple monthly payment, often at a lower interest rate. Some financially-feasible debt consolidation options include using a balance transfer credit card or a home equity loan.

A balance transfer credit card is when you apply for a new card with a 0% or low introductory interest rate on balance transfers. Then, you transfer your high-interest balances to the new card and continue making payments with no or a low-interest rate. Note:the low rate is usually promotional and  expires in six to 18 months, so be sure to put the pedal to the metal on repaying your loan while the rate is low.

A home equity loan or line of credit (HELOC) is when you take out a loan against your home to repay your credit card debts. This may be worthwhile if you’re offered a low-interest rate and only if you can guarantee you’ll repay the loan on time; otherwise, you put your home on the line.

The Snowball Method

The snowball method is a fan favorite and highly recommended by financial guru Dave Ramsey. This motivating method tackles your smallest debts first, helping you to eliminate one debt after the other.

First, list out all of your credit cards and their balances from smallest to biggest.

Next, make the minimum payments on all of your balances except the smallest. Make extra payments on the card with the smallest balance to quickly pay it off and get rid of it for good. Then, move on to the second smallest, and so on. 

Debt Avalanche

A debt avalanche is also called debt stacking. It is when you focus on paying off the cards with the highest interest rates first, regardless of the balance.

Make a list like you did for the snowball method, but this time list from highest interest rate to lowest and start tackling at the top.

The debt avalanche method makes sense mathematically, but it may be more difficult to withstand emotionally since it will take you longer to pay off a high-interest card than a lower-balance card. In any case, the strategy choice is yours to make.

2.    Freeze Your Cards

As you kickstart your debt repayment journey, consider putting your credit cards on ice – figuratively or literally. Some cards can be frozen instantly online, while others can be safely stored away in a drawer and removed from your immediate payment options.

Unless you use your credit cards for monthly bills that you consistently pay off, it’s time to turn your back on the plastic until you regain control of your outstanding balances. A deliberate separation from your credit cards will help you stay focused on your debt repayment and save you from unnecessary temptations to spend what you don’t have.

Adopting digital banking apps also offers a fantastic alternative to using credit cards for everyday expenses. Digital banking apps like Clair offer instant wage advances, so instead of using a credit card and paying interest, you can take a loan directly from your paycheck with no fees. Plus you know you can pay it back because you’ve already earned the money. 

When you sign up for Clair, not only do you get free instant access to your earned wages, but you also get cashback rewards on gas and groceries* when your employer activates Clair. Refer your employer now.

3.    Put All Extra Cash Towards Your Debt

Paying off debt is a journey that begins with careful planning and budgeting, and this crucial step takes center stage in #2. Understanding your income and expenses helps identify hidden cracks and crevices in your finances where money gets lost. You know, those little expenses like the $15 you spent at the drive-through while you had perfectly good food waiting at home.

Don’t worry; we won't nag you like your parents used to. Instead, consider redirecting your discretionary spending toward paying off your credit card debt.

The same goes for any unexpected income that comes your way, such as a raise, bonus, birthday money, inheritance, or gifts. Avoid the attempt to splurge and instead invest in your future by hacking away at the debt that currently blocks you from financial freedom.

Extra tip: Since financial restraints could also cause you to detest your day-to-day, you may enjoy playing the “even-it-out” game. If you feel you really want that drive-through coffee, purchase it, but put the same amount you spend towards an extra payment for your credit card.

For example, if you spend $10 at the coffee shop, electronically transfer another $10 toward your credit card balance. This game allows you to enjoy some purchases while remaining conscious and proactive toward your debt repayment.

4.    Lower Your Expenses

To increase your credit card payments and get rid of the debt sooner, lower some of your expenses and put the difference into your credit card payments. This way, your total bill amount stays the same while your credit card balance begins to plummet.

Some expenses you may be able to lower easier include:

·       Switching from a contracted phone plan to a month-to-month (big names like T-Mobile and Verizon are now jumping on board the pre-paid train)

·       Canceling subscriptions (do you really need three streaming services?) or choosing cheaper family plans

o   If you prefer to stream, consider cutting out cable

·       Cooking at home instead of ordering out

·       Comparing prices with helpful apps before shopping

·       Using energy-efficient appliances and light bulbs

·       Using public transportation a couple of times per week

·       Negotiating your bills, insurance plans, and interest rates by spending some time on the phone with customer service

5.    Consider a Side Hustle

When you’re ready to attack your debt on a new level, increase your income and put it all towards eliminating those balances. Consider taking on extra shifts or overtime at your primary job, starting a side hustle, participating in the economy gig, freelancing, or working a second W-2 job. A few extra hours of work per week could make a big difference in how fast you pay off your credit cards.Struggling with credit card debt can be overwhelming, especially if you're only making minimum payments that barely make a dent in the balance. Today, we'll explore effective strategies to help you pay off credit card debt fast and regain control of your finances.