Effective Strategies for Paying Down Your Credit Card Debt Faster

Feb 16, 2018

Credit card debtDoes the thought of confronting your credit card debt makes you cringe? You’re likely well aware of the many ways high consumer debt can impact your financial health – draining you of funds to create a safety net, preventing you from reaching important savings and investing goals and even hurting your credit score. On the other hand, it can be highly motivating to know that there are a number of painless ways to pay down your debt faster, save money in interest and even lift your credit score. Do yourself a favor and try one or more of these strategies that don’t involve any needless deprivation:

Get the ball rolling by targeting one card at a time: Instead of trying to reduce your debt by making slightly more than the minimum payment on all of your cards each month, focus on paying them down one at a time. For the most cost-effective way to do this, start with your card with the highest interest rate. Put any extra money you can toward this account while making sure to make the minimum payments on your other cards. Once this account is paid in full, apply the cash you would have used to pay this bill to your credit card with the second-highest interest. Then continue this process until you’ve successfully cleared the balances on all of your cards. Have several credit cards with similar rates or prefer a method with a quicker psychological payoff? You might instead target your credit card with the lowest balance and pay this one off first, then focus on your card with the next smallest balance, and so forth.

Try negotiating with your card issuers:  Calling your creditors with a polite request for some debt relief in the form of lowered interest rates is a fairly quick and easy step, but research tells us that relatively few people actually do it. What’s interesting, this same survey indicates that eight in ten people who have asked their credit card companies to drop annual fees, waive late charges and reduce interest rates got what they wanted. Although there’s certainly no guarantee that your creditor will agree to your request, consider that making this small effort might save you hundreds of dollars per year, and it won’t hurt you to try.

Decide if it’s time for a balance transfer: If you’re carrying a balance on multiple credit cards with high interest rates, consolidating this debt to one card that offers lower rates can be an excellent solution for you. Not only will it save you substantial money in interest payments, but it can also make it much easier to manage your financial life. By streamlining multiple payments into only one per month, you’ll save time and reduce the mental energy you spend on paying your debt. You’ll also lower your risk of accumulating late fees and other penalties when you don’t have to constantly make multiple credit card payments.

How to make a balance transfer work for your financial benefit:

Get clear about what you’re getting: When shopping for a new credit card, be sure to weigh in the cost of any annual or balance transfer fees the card issuer may require. Balance transfer fees may cost you anywhere from 3.00- 5.00 % of the amount you plan to transfer, so you’ll want to know that your savings from the lower interest rate will be more than the cost of transferring. Also pay attention to how long the introductory interest rate will last and what it will be after this term has ended.

Don’t close your older accounts immediately: Once you’ve consolidated your credit card debt with a balance transfer, it may seem like the natural thing to do would be to cancel your older accounts. However, it’s generally advisable to keep these accounts open, at least for a time, to avoid a negative impact on your credit score in two possible ways.


First, accounts with a longer credit history are viewed more favorably by creditors, so canceling your older accounts right away works against you in terms of the average age of your accounts. As NerdWallet explains, the longer an account has been open and active, the better it is for your score, and this is especially true for accounts with a positive payment history. Just to be clear, we’re not advising you to use your old cards to rack up new debt! But once in a while, it’s a good idea to use them so that they remain part of your credit history demonstrating purchases with responsible payments.


Secondly, closing your older accounts can hurt your credit utilization. A major factor contributing to your credit score, your credit utilization rate is the percentage of revolving credit you’re using as compared to your credit limits. With less available credit, your credit utilization will increase, lowering your credit score. But by keeping these accounts open, you’re maintaining the available credit line from these cards. Aim for a credit utilization ratio of less than 30 percent. For further insight into credit utilization, check out this article from The Balance.


Be cautious about overspending on your new card: While a balance transfer is a terrific way to fast track debt elimination, on some level your own discipline as a consumer has to come into play. Obviously, racking up higher debt would be counter-productive to your goal of paying it off, so take care to control your spending once you’ve completed a balance transfer. Have trouble managing a budget? Take advantage of free and secure online Personal Financial Management (PFM) tools like SF Police Credit Union’s MoneyTrac. These tools take the guesswork out of creating and maintaining a budget and make it simple to track and monitor spending.

Are you ready for some relief from your high-interest credit card debt? Transferring your outstanding balances to an SFPCU Platinum Visa can give you the boost you need to get on more solid financial footing. With competitive rates and no annual fees as well as no balance transfer or cash advance fees, our Visa offers plenty of advantages for those seeking to make a sizeable dent in their credit card debt. What’s more, it includes a number of valuable benefits for cardholders including eligibility for our CU Rewards Program. By enrolling, you’ll earn points for every dollar you spend on your SFPCU Platinum Visa toward rewards such as gift cards, vacations, brand-name merchandise and more! For details, restrictions, and to apply, visit http://bit.ly/PlatinumVisaSFPCU.

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