Pay Off Your Credit Cards in Half the Time

by Ryan Guina

Credit card companies want you to be in debt. Interest rates and fees are how they make money, so it is in the best interest of the credit card company to require you to only pay a few dollars each month toward your credit card bill. Credit card companies charge you a small percentage of your total debt as your monthly minimum payment and most people go along with their plan.

And why not? It’s a nice feeling to only have to pay $20 a month… at least until you look at the bill and see that of your $20 payment, only $2 or $3 is actually going toward the debt. Not so Fun Fact: If you make minimum payments on your credit card debt, it will take you years to pay them off.

How to pay your credit cards off in half the time

pay credit card debt in half the timeWith a little planning and work you can eliminate your credit card debt in much less time than you probably think you can. Use these tips and you will dramatically reduce the time it takes to pay off your credit cards.

Make the commitment – stop using your credit cards.

The absolute first thing you need to do is dedicate yourself to getting out of debt. This means you need to stop using your credit cards. Cut them up, put them in the blender, freeze them in a block of ice… Do whatever it takes to keep them out of reach and remove the temptation once and for all.

Transfer your credit card debt to a 0% interest credit card.

Some credit card companies offer 0% balance transfer credit cards that come with a 0% interest rate as an introductory offer to bring in new customers. I know the last thing you want to do when you are trying to get out of debt is open a new credit card, but this is one time where it is in your favor to do so. It is much easier to pay off debt at 0% interest than it is at 20% or more. Just don’t use the credit card after you open it and transfer the balance, or you will accrue interest on your new debt.

Get organized.

The next step is to make a full assessment of your financial situation. Start by gathering all your bills and list them on a sheet of paper. Be sure to include your credit card bills, rent or mortgage payment, car bills, any recurring bills like cable, internet, cell phones, etc, and any expected bills that may come due in the near future such as annual car insurance, new tires, etc. Next, list all sources of income.

Set a Budget.

Once you have your list of income and expenses, you should create a budget. It may take you a couple months to refine it, but that’s OK. The idea is to get to the point that you know and understand where your money is coming from and where it is going. Give each dollar a plan, and make sure it goes what you want it to do, instead of the other way around. Here is a list of the best budgeting tools to help you get started.

Pay Early, Pay Often.

Here is a little known fact about getting rid of credit card debt: credit card companies are required to apply your payment to your debt the day they receive it. That means paying your debt early reduces the principal, the amount on which you are paying interest. Sending in your payments even a few days early reduces the principal enough to make a small difference. If you get paid twice a month, then send in half of your payment on your first paycheck and the other half on your second paycheck. You can even send in payments more often than that if you come across a little extra money during the month. *Note: Some credit card companies limit the number of monthly payments you can send per month, so check before sending more than a few payments in a month.

Use a debt snowball.

A debt snowball is an efficient way to get out of debt. To start a debt snowball you pay the minimum on each card and you apply any additional money to the card with the lowest balance. When you pay that card off, apply the money you were paying on that card to the card with the next lowest balance. Repeat the process until you have paid off all your credit cards.

Continue your commitment to stay out of debt.

Once you have eliminated your credit card debt it is up to you to stay out of debt. Stick with your budget, and remember not to purchase anything you can’t pay cash for.

Photo credit: Andres Rueda

Published or updated October 22, 2012.
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{ 18 comments… read them below or add one }

1 Hank

My wife and I used our tax refund to really tackle our debt as fast as possible, paying off huge chunks at a time. The same type of approach can be used with any year end bonus you may get too.


2 Miranda

I think your essential point is to first STOP using credit. When my husband and I first started paying off our credit card debt years ago, we still used credit cards on occasion! That really slowed the process. The key is to not get deeper in debt while you are trying to get out. It seems obvious, but it’s surprising how often people keep using their cards.


3 Ryan

That’s the most crucial step. Continuing to use credit cards while trying to pay them off is like digging a hole and moving the dirt to the other side of the hole instead of throwing it out of the hole.


4 Craig

Do everything you can to pay off as much if not all the CC at the end of the month. If you can’t then you probably should not use the credit card because debt will just add up and it’s difficult to reverse.


5 Jessica

I disagree on the idea of transfering to a 0% credit card. Most people don’t realize that there is almost always a substantial “transfer charge” (last time I looked into this, it would be almost 10% of my balance.).

I did the math and even if I took TWO YEARS to pay off my credit card balance with my old card at 9%, it still would cost less overall than the transfer to a 0% card.

Read those terms and conditions carefully folks! Also, remember that opening a new card dings your credit score–you have an account with less time open, a recent inquiry. Not good for your score all around.

I’m of the opinion that a 2nd job and a lot of elbow grease will take care of it. Also, I’m a huge fan of the paying early and often. I always photocopy my statements and send several payments a month (I’m self employed, so cashflow is sporatic).



6 Ryan

Jessica, thanks for pointing out the balance transfer fees. I should have pointed that out in the article (it is clearly referenced in the article that lists the best balance transfer cards). The cards I list offer 6 months at 0% interest for a 3% balance transfer fee, and there is one card that offers 12 months at 0% interest for a 5% balance transfer fee.

Most people who carry a balance on their credit card are paying above 10% interest, and some people pay well into the 20% range. So this is a good deal for people carrying credit card debt on credit cards with high interest rates and for people who can commit to being debt free by stopping the use of credit cards and making payments above the minimum.

Opening a new credit card can affect your credit score, but depending on how many lines of credit you have, the type of credit you have, and your credit utilization, it may not have much of an impact. The other thing to consider is that by reducing your debt more quickly, you decrease your credit utilization which will work toward increasing your score. Here is more information about How your credit score is determined, and how to improve your credit score.

Your credit score is important, but not as important as being free from debt. Thanks for extending the conversation by bringing up those great points. 🙂


7 NatalieMac

When I first started on the journey of paying off all my debt years ago, I had five credit card accounts, all of which were nearly maxed out and I’d developed the terrible habit of paying the minimum payment each month. I’d stopped using the cards months before, but only because they were all so close to the maximum balance, I’d have been lucky to have been able to charge a pack of gum. The first change I made to my habits was to start paying double the minimum payment. It was shocking (in a good way) how quickly the balances started dropping compared to when I was paying the minimum. The payments I was making were still small, but so much more was going toward paying off the principal. It was an easy change to make, and it was inspirational enough to keep me going and stay on the right financial path.


8 Financial Samurai

Just wondering, why do you think people actually go into credit card debt and NOT pay them off every month? Isn’t it irrational to take on CC debt given interest rates are among the highest?

In other words “Why Do People Spend More Than They Earn??” We’ve been struggling to find the right answer to this question over at FS for a while now.

If nobody ever spent more than they earned, we’d have a lot less financial troubles no?


9 Mrs. D

I just want to respond to your question. Sometimes there is something more important, like a child or someone’s health, which are both reasons why we got into debt. Sometimes you have to sacrifice and go into debt to save someone else…and there is no other choice. Especially since the money was expected to be paid up front…or we would be out of luck…and then the child’s life is ruined or over. Think outside the box Financial Samurai. Sometimes, life deals things we cannot afford to pay in full and take whatever we can get to deal with those things. I hope you don’t have to go through something like that. However, We got up to $65K and in 3yrs, we have knocked it down to $23K..and our credit rating is still over 750. And, all this, is thanks to GOD! We haven’t been late on anything in over 16yrs…and that is all GOD too. This opportunity to be in debt to save someone else…was also a blessing…especially looking at the alternatives.


10 Ryan

Mrs. D, There are always extenuating circumstances that are beyond one’s control – such as illness, job loss, natural disasters or other catastrophic losses. No one can fully plan for these things and I don’t believe this is what Financial Samurai was referring to when he mentioned people having the ability to stay out of debt by simply not spending more than they earn.

If you have time, go read his article… it is about giving in to consumerism and instant gratification. Many people can avoid debt if they take the time to work for things instead of wanting to have everything at once.

I cannot imagine what you and your family have gone through, but it is a testament to your faith and integrity that you have done so well with your finances. I pray the health of the person(s) in question has improved and they are on the path to a full recovery.


11 JAY

Because it was fun at the time. Looking back it wasnt fun, it was just me being young and stupid. Paying it all off now, but can def say, the pain in paying it off is alot worse than the fun I had spending. Lived and learned I guess. Paid extra on accounts, and closed all but one. Like I said it was painful, but I am glad I stuck to paying them down instead of going bankrupt. Now if I just stay smart and dont get into that situation again. Cash is the way to go, if you can not afford to pay cash, you do not need it.


12 Jessica

We had a similar problem–in the process of adopting our first child via disruption (a previously failed adoption), we found out after our daughter was in our custody that we’d be responsible for paying the legal costs of the family who relinquished her–a surprise $15,000 bill. (YIKES!).

Similarly, on our last adoption trip, to Africa this time, our four-to-ten day stay was delayed into 29 days due to medical complications and the embassay loosing paperwork. 19 days of international unbudgeted, and completely unimagined, also, emergency medical care overseas (I was attacked by a dog in Ethiopia, where Rabies is of substantial concern).

Was glad I was able to pull out the plastic in both cases. If we’d run out of money, our adoptions simply would not have been completed–and we wouldn’t have our children, similarly, they’d be in legal limbo–already assigned to us and legally ours but with us unable to assume legal custody.

Note to self to plan on SUBSTANTIALLY more budget for unexpected costs along the way next time–but in both cases the circumstances were completely bizarre and unforseeable.


13 Ryan

Jessica, please see the response to the comment above. There is always the possibility of unforeseeable circumstances leading todebt. The comments regarding preventing debt refer to wanton consumer debt, much of which can be avoided by planning and practicing the art of delayed gratification.

Regardless of how the debt occurred, the key is to work toward paying it off and working toward making sound financial decisions in the future. Even then, some things, such as the events you described, may not be preventable.


14 Ms. Frugalicious

I am working toward paying off credit card debt, and I’ve been able to make a sizeable dent in what I owe by doing two things:

1) I stopped using the cards, just as Ryan suggests…it really is impossible to pay off the debt otherwise.
2) I started earning more money each month. A friend of mine passed on an advance copy of Loral Langemeier’s soon-to-be-released book, “Put More Cash in Your Pocket,” and the examples in there made me realize that I could start a profitable side business by using skills I already have. I used to work as a tutor at a test-prep company, so now I am finding my own clients from the local high school. I put all the money I make toward my debt, and it makes a big difference. Using tax refunds or year-end bonuses, as Hank suggests, is another good idea.


15 Guy

Hello everyone, I went over my credit line by $6.00 this is the first time it has happened. This is also my first credit card and I didn’t know what it meant. Is my credit score damaged because of this? I always pay on time and I always pay more than the minimum amount due(almost triple). Thank.


16 Ryan

Guy, your credit score probably won’t change much, if at all. You may even be able to get any over the limit fees waived if you contact your credit card company and ask them to remove the fee. You can also request the credit card company not to allow you to go over your limit. It’s important to pay attention to your credit card balance and try not to go over – the added fees can cost you a lot more than you bargained for.


17 Pat

I have 2 credit cards…one 21%/23% interest…Would it be better to pay half of the b alance on each or pay one off completely and half on the other..balance on each is $3500


18 Ryan

Pat, I would pay off the higher interest rate first. But these are close enough that it shouldn’t make a huge difference if you pay them both off quickly.


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