What are the strategies to pay off Credit Card debts faster?

Posted on Thursday, September 7th, 2023 | By IndusInd Bank

Credit card debt can be a major source of stress and frustration for many people. It can also affect your credit score, your ability to borrow money and your financial goals. If you are struggling with high credit card debt, you may wonder how to pay it off faster and save money on interest. 

Fortunately, there are some proven strategies that can help you reduce your credit card debt and improve your financial situation. Here are some tips to get you started: 

1. Know your budget 

The first step to paying off your credit card debt is to know how much money you have coming in and going out each month. Create a realistic budget that covers your essential expenses, such as rent, utilities, food, and transportation. Then, see how much money you have left over for discretionary spending, such as entertainment, shopping, and dining out. 

Try to reduce your non-essential spending as much as possible and allocate more money towards your credit card debt. You can use a budgeting app to track your expenses and monitor your progress. 

 
2. List out your credit card debts, minimum payments, and APR 

The next step is to gather all the information about your credit card debts, such as the balance, the minimum payment, and the Annual Percentage Rate (APR). You can find this information on your credit card statements or online accounts. 

Write down all the details of your credit cards in a list or a table. This will help you see the total amount of debt you owe, the interest rates you are paying, and the minimum payments you need to make each month. 

 
3. Select a credit card debt reduction strategy: Snowball method vs. Avalanche method 

Once you have a clear picture of your credit card debt, you need to choose a repayment strategy that works best for you. There are two common methods that can help you pay off your credit card debt faster: the snowball method and the avalanche method. 

The snowball method involves paying off the smallest debt first, while making the minimum payments on the rest. Once the smallest debt is paid, you’ll move on to other smaller ones, and so forth. This way, you create a momentum of success and motivation as you see your debts disappear one by one. 

The avalanche method involves first paying off the highest interest rate debt while making a minimum payment for other debts. Once you pay off the highest interest rate debt, you move on to the next highest one, and so on. This way, you save more money on interest and reduce the total cost of your debt. Both methods have their pros and cons, so choose the one that suits your personality and financial situation. The most important thing is to stick to your plan and make consistent payments every month. 

 
4. Automate your payments 

One of the easiest ways to ensure that you pay off your credit card debt faster is to automate your payments. By automating your payments, you avoid missing any due dates, paying late fees, or damaging your credit score. You also eliminate the hassle of remembering to pay each bill manually. Plus, you can always adjust the amount or frequency of your payments if needed. 

 
5. Find alternative means to pay off credit card debt 

If you have a good credit score and a steady income, you may be able to find some alternative ways to pay off your credit card debt faster and cheaper. For example:  

– You can apply for a balance transfer credit card that offers a low or zero interest rate for a limited period of time. This way, you can transfer your existing credit card balances to the new card and pay them off without accruing any interest. However, be aware of the balance transfer fees, the regular APR after the promotional period ends, and the impact on your credit utilization ratio. 

– You can apply for a personal loan that has a lower interest rate than your credit cards. This way, you can consolidate your credit card debts into one loan and pay it off with fixed monthly payments over a set term (usually 2 to 5 years). However, be aware of the origination fees, the prepayment penalties, and the impact on your credit mix. 

Before choosing any of these options, make sure to compare their costs and benefits carefully and consult a financial advisor if needed. 

 
6. Cultivate a healthy credit lifestyle 

Paying off your credit card debt is not only a matter of numbers, but also a matter of habits. To avoid falling back into debt or accumulating more debt in the future, you need to cultivate a healthy credit lifestyle. This means: 

– Using your credit cards responsibly and sparingly. Only purchase  what you can afford to pay off in full each month and avoid carrying a balance on your cards. This will help you avoid interest charges, maintain a low credit utilization ratio, and boost your credit score. 

– Paying your bills on time and in full. If not possible, always pay at least the minimum amount due on your credit cards and other bills by the due date. This will help you avoid late fees, penalty APRs, and negative marks on your credit report. 

– Saving money for emergencies and goals. Build an emergency fund that can cover at least three to six months of your living expenses in case of an unexpected event, such as a job loss, a medical emergency, or a car repair. This will help you avoid using your credit cards or taking out loans to cover the expenses.  

 
7. Freeze or lock your card if you want to avoid incurring more debt 

If you find it hard to resist the temptation of using your credit cards or want to take a break from them, you can freeze or lock them temporarily. This means that you disable the ability to use your cards for new purchases, cash advances, or balance transfers until you unfreeze or unlock them. However, freezing or locking your cards does not mean that you stop paying them off. You still need to make at least the minimum payments on your cards every month until you pay off the balance in full. 

If you are looking for a credit card that offers low-interest rates, flexible payment options, and attractive rewards, you may want to check out IndusInd Bank credit cards.  Whether you are looking for a card that gives you cashback, travel benefits, lifestyle privileges, or fuel savings, IndusInd Bank has a credit card for you. 

To apply for a credit card from IndusInd Bank, you can visit the link below and compare the different credit cards and choose the one that best suits your needs. 

Disclaimer: The information provided in this article is generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. Hence, you are advised to consult your financial advisor before making any financial decision. IndusInd Bank Limited (IBL) does not influence the views of the author in any way. IBL and the author shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information.