17 Ways to Get Out of Credit Card Debt Faster
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Looking for a faster way to get out of debt? Whether you have credit card debt, student loan debt, a car loan, or a personal loan, debt can hang over your head for years. And depending on how much you owe, it can feel as if you’ll never get out of a hole.
The reality is, paying off debt is often a marathon and not a sprint. It’s easy to get into debt—and not so easy to get out. But with a solid plan and a few adjustments, you can put a serious dent in your balances.
Here are 17 Things You Can Do to Get Out of Debt Faster
1. Pay more than your minimums
This might seem like an obvious tip, but it has to be stated for those who don’t know the importance of paying more than the minimum due.
Yes, minimum payments are super affordable. The problem, though, is that they don’t get you out of debt fast. These payments can range from 2% to 5% of your outstanding balance.
If you have a $5,000 credit card balance (paying 15% interest) and a minimum monthly payment of $100, it’ll take approximately 79 months to pay off the balance (or 6 1/2 years). You’ll also pay about $2,800 in interest, assuming your principal balance doesn’t increase.
On the other hand, if you increased your monthly payments to $200 a month, you would pay off this balance in about 31 months (less than three years) and pay about $1,032 in interest—a big difference.
2. Negotiate a lower interest rate
If you have good credit, call your credit card company and ask for a lower interest rate. With a lower rate, more of your monthly payment goes toward reducing the principal balance.
Using the above example, if your credit card company reduces your interest rate from 15% to 9%, and you continue making the same monthly payment of $200, you’ll pay off a $5,000 credit card balance in 28 months. What’s more, you’ll only pay $557 in interest.
3. Use a 0% interest credit card
Another option is to switch to a 0% interest balance transfer credit card, and then transfer your high-rate credit card balance to the new card. These cards typically offer 0% introductory rates for the first 12 to 18 months, in which case you could pay off a $5,000 balance in about 25 months.
4. Use a windfall to pay off debt
Jump start your debt pay off journey by putting free money or windfalls toward balances. This includes any money you receive throughout the year—tax refund, work bonus, gift money, etc.
5. Save a pay raise
If you’re fortunate enough to get a pay increase at work, don’t upgrade your lifestyle—at least not yet. Instead, use the extra money on your check to pay off debt.
Bringing home an additional $300 per month could pay off a $5,000 credit card balance in about 16 months. Or, use this money to increase what you’re currently paying on student debt, a car loan, or a personal loan. If you have a minimum student loan payment of $200 a month, increase your payments to $500 a month.
6. Get a part-time job
Sometimes, income from a day job only covers living expenses and there’s little disposable cash for debt repayment. If so, look into getting a part-time job and working two, three, or four evenings a week.
If you can bring home an additional $150 a week, that’s about $600 a month toward debt repayment.
7. Hustle
Instead of getting a part-time job, turn a hobby into a side hustle or small business. You’ll probably make more with a side hustle than you would with a part-time job.
Good side hustles might include freelance writing, starting a blog, pet sitting, housesitting, office cleaning, lawn care, etc.
8. Make bi-weekly payments
Another trick to get out of debt faster is to make monthly payments every two weeks (when you get paid), rather than once a month.
Some creditors charge interest daily, with your current balance determining how much you pay. Making a payment every two weeks lowers your balance and you pay less interest over time. As a result, a greater percentage of payments go toward reducing the principal.
This can work with credit cards and student loans, but not every lender accepts biweekly payments, so talk with your bank first.
9. Refinance your mortgage
Refinancing your mortgage to get a lower mortgage rate might reduce your monthly payment. If you’re able to reduce your payment by $200 a month, use this savings to pay off other debt such as credit cards, car loans, and student loans.
When refinancing a mortgage, run the numbers to see if it makes sense to choose a 15-year or a 20-year term instead of resetting the clock for another 30 years. This way, your new payoff date remains close to your original payoff date.
10. Sell items
You most likely have old clothes, toys, electronics, and other household goods (in good condition) stashed somewhere in your house.
Instead of throwing these away, sell them for cash. If you’re able to get $300, that’s cash you can use to hit your money goals.
11. Ditch cable
Cable TV isn’t getting any cheaper anytime soon. Review your package to see how much you’re currently paying each month. Can you reduce this expense? Or better yet, can you cancel cable altogether and use streaming services?
Cutting the cord can potentially save $100 to $200 a month, which you can allocate to debt repayment.
12. Freeze your credit card
It’s also important to stop using credit cards. Adding new charges and carrying this balance from month-to-month continues the vicious cycle.
To avoid temptation, cut your credit cards in half and don’t save your credit card information on websites. Don’t cancel your credit cards, though—especially while carrying a balance. This move could increase your credit utilization ratio and lower your credit score.
13. Budget
Not having a monthly budget increases the likelihood of overspending. If you run out of cash before the end of the month, you might rely on credit cards to make ends meet.
Developing a spending plan keeps track of where your money goes. Some people use the 50-30-20 budget to reign in spending. This involves 50% of your income going to living expenses; 30% to wants; and 20% to savings and debt repayment.
Keeping your spending categories within these percentages can reduce extra spending, creating more disposable income for debt repayment
14. Reduce retirement contributions
Another option is to “temporarily” reduce your retirement contributions. If you’re currently contributing 6% to your 401(k), decrease your contributions to 4% and use the extra money on your paycheck to pay off debt. Once you’ve eliminated debt, increase your contributions.
15. Skip a yearly vacation
This tip might not sit well with everyone, but think about how much you spend on a week vacation away from home. Depending on the size of your family, the cost of airfare, hotel, attractions, and food…you might spend thousands.
Sacrifice one or two yearly vacations, and then use this money to knock out your debt. You’ll have peace of mind and more money for other things – including future vacays.
And yes, everyone needs a break. But rather than an expensive trip, plan a staycation and be a tourist in your own city.
16. Rent a cheaper home
Rethink your living situation if you don’t have extra money to pay off debt. Housing is likely your biggest expense, taking 30% or more of your monthly gross income.
Reducing this expense is a practical way to increase your disposable income and get out of debt fast. Get a roommate, move into a cheaper place, or move back home with your parents. It’s a small price to pay for less debt…and more cash in your pocket.
17. Cut expenses
Also, make it your aim to cut a few variable/unnecessary expenses. If you comb through your statements, you’ll likely find several costs that you can cut, for example:
- get rid of a gym membership
- use apps like Ibotta.com to save on groceries (Use code “renmwpo” at registration and Ibotta will give you $10 when you submit your first receipt”)
- look for free entertainment and recreation
- shop at the thrift store
- only shop when you need something
- get rid of your subscription services
- brown bag your lunch
- do your own hair and nails
These simple adjustments can potentially save hundreds, putting you closer to a debt-free life.