First, put as much spare cash as you can toward paying off your credit cards. This may seem obvious, but it’s essential. Once you’ve done that, try these strategies.
Take that “due date” seriously
Late fees can set you back $25 to $35 a pop. They can damage your credit score, too. Many credit card companies will waive late payment fees, if you ask. But if you’re chronically tardy you’ll pay the penalty, on top of an already hefty monthly interest charge.
Ignore the monthly minimum
Paying off your balance with minimum payments can take decades. Say you charge $2,000 on a card with a 17% interest rate and you only pay the monthly minimum (about 2% of the balance). It’ll take more than 21 years to pay off the balance. Pay twice the minimum and you’re debt-free in less than three years.
Tackle one card at a time
When paying off multiple cards, start with the highest interest rate—it’s costing you the most—then work you way down. However, for some people, tackling small balances first is more motivating. Paying off more cards (rather than more debt) gives them the warm and fuzzes.
Request a lower rate
Credit score, the type of card, and the type of lender all influence your interest rate. Sometimes, a single phone call to your credit card company can result in a lower monthly interest rate. If you’ve been offered a better deal with another card, say so. Your card company may match that offer.
Move debt around
If you trust yourself to open a new credit card but not spend on it, consider transferring a big balance to a card with a low or zero intro APR. You’ll need a good credit score and, most likely, will pay a balance transfer fee. But if you can pay off the balance in full before the introductory rate expires—and the new higher rate kicks in—you could save serious money. But remember, owing more than 50% of your available line of credit can harm your credit score.
Limit luxury purchases
Cut back on non-essential spending and apply the savings to your card balance. Maybe make your own morning coffee instead of buying that no-foam double macchiato on your way to work. Or invite friends over for a potluck dinner rather then eating out. Lowering your card balance can slash payments by years—even decades.
Say no to plastic
Remember cash? Unfriending your credit cards is among the smartest moves you can make. Keep spending and you’ll never get ahead. To avoid temptation, remove credit cards from your wallet. And talk to your bank about paying credit card bills automatically from your checking account.
Turn many into one
A consolidation loan lets you combine multiple credit card balances into one, easy-to-manage monthly payment. Shop around for the best rates. Your loan should reduce your interest rate and lower your monthly payment. Then take what you save and start an emergency fund.