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Last Updated on June 17, 2020 by NandiNN

How To Pay Credit Cards

Paying off credit card debt is extremely hard without a proper plan.

Credit card debt can be a significant issue for plenty of consumers in the United States.

According to recent statistics, the average credit card balance is just over $6,300, an increase of 3% compared to the prior year.

Access to credit can be a helpful financial tool, but credit card mismanagement can rack up substantial amounts of debt.

Furthermore, credit cards are well known for high APRs which may significantly drive interest costs.

With that in mind, anyone who’s struggling to make credit card payments may find themselves in a serious pinch.

Devising a plan to eliminate credit card debt quickly is essential; furthermore, certain plans can save you money in the process.

There are several ways to go about it.

Here are a few common ways to save money while paying back credit card debt.

But before we get started on the different tips for paying back credit card debt, we would love for you to join our growing Facebook page! Be sure to follow us on Instagram too! 

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Paying Back Credit Cards Effectively

We are going to share our most effective tips for paying back credit cards fast!

If you are drowning in credit card debts, be sure to follow the steps below to get yourself out of debt. 

Here are a few tips for paying off credit card debt using the snowball effect. If you are on a low income, use these tips to pay off your debt fast #creditcarddebtt #payingoffdebt

Pay More than the Minimum

By paying just the minimum, you are prolonging your credit card repayment.

In fact, you are extending repayment as long as possible.

When you pay only the minimum, the principal balance is usually left almost untouched. This allows interest to capitalize on the largest possible principal balance.

In short, minimum payments are designed to maximize interest costs.

To counter this, you should always pay more than the minimum.

It is essential for paying down credit card debt faster and instrumental in saving on interest.

Larger payments are more likely to cover interest payments and cut into more of the principal balance. By devoting more cash to your debt now, you can expect to pay less in interest and fees later.

While this is a basic and effective strategy, it comes with limitations.

It’s easy to say “pay more than the minimum,” but it may not always be that simple.

You need to have the extra cash to make larger payments. In order to come up with the money, either high income or budget cuts would be necessary.

The money has to come from somewhere, and this isn’t a possibility for everyone.

This also may not be sustainable for multiple credit card accounts.

Consolidating Credit Card Debt

Debt consolidation loans may help save money on credit card repayment.

Debt consolidation loans are typically just personal loans intended for the purpose of debt consolidation; they are offered by personal loan companies, private banks, or lenders.

Here’s how it works:

A qualified applicant would take out a personal loan and use the lump sum to pay off all credit cards.

With all credit card balances wiped clean, the debtor makes monthly payments on the personal loan according to schedule.

This new loan comes with a new interest rate determined by credit score and other criteria.

There are two main benefits to a debt consolidation loan that can save money.

The first is simplicity.

It’s easier to make payments on just one loan account versus several credit cards. You may be less likely to miss a payment and incur a fee that way.

The second benefit is lowering your interest rate.

If you qualify for a low-rate personal loan, then you may be paying that debt off at a lower rate. This reduces the rate of interest capitalization and saves money.

However, there is an obstacle to consider.

Personal loans are usually unsecured, so lenders emphasize great or excellent credit and high income as qualifying criteria.

Applicants that fit these criteria are more likely to get approved with lower rates, but it is much harder to get a low-rate loan with low income or poor credit.

Debt Avalanche Method

The debt avalanche method may be a good option for someone who wants to budget their way out of multiple credit cards.

It’s one of the fastest repayment methods, and it’ll save money on interest.

This method prioritizes the high-interest credit card account while maintaining minimum payments on all other accounts.

In short, you make minimum payments on all accounts, and you must make larger payments on the credit card account with the highest interest rate.

Once the high-rate card is paid off, repeat the procedure with the next high-rate card.

By focusing on high-interest, you reduce the rate of interest capitalization on the most expensive debt.

This is the main benefit of the debt avalanche method.

It’s also a way to budget for paying back multiple credit cards, as opposed to relying on a debt consolidation loan.

Keep in mind this method requires high income or serious budget cuts.

It relies on making larger payments on a credit card account while simultaneously making payments on various other accounts.

This can be tough to keep up with.


Saving money on credit card repayment revolves around one concept: mitigating the cost of interest capitalization.

Each method has advantages and disadvantages, but they all focus on either reducing interest rates or not allowing interest to capitalize in the first place.

This is an important aspect of all types of debt.

The interest rate is a key factor in the cost of debt whether it’s from credit cards, mortgages, student loans, and more.

Andrew is a Content Associate for Lendedu – a website that helps consumers and small business owners with their finances. When he’s not working, you can find Andrew hiking or hanging with his cat Colby.

Read this next:

Smart Girls Guide to Living Paycheck to Paycheck

How Living On A Tight Budget is Not A Bad Thing

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How to Save Money While Paying Back Credit Card Debt