Having a repayment plan is crucial for getting out of credit card debt quickly and cheaply. There are several widely accepted ways that financial professionals suggest following. I will talk about a multiple step guide to paying off credit card debt, starting with the finding a payment strategy that is tailored to your unique situation. 

Pay more than the minimum

A simple start to resolving credit card debt is to pay more than the minimum balance on your credit cards. If you are able to pay more than the minimum, you will be able to pay off your credit card debt faster and with less interest.  

Debt Snowball

Another repayment method is called the debt snowball. This method appeals to the feeling of accomplishment. With the snowball method you will be making minimum monthly payments while putting extra money towards paying off your smallest loan first. Once that loan is paid off, you move that payment to the next smallest loan. This method gets its name because the payments you are making are like a snowball rolling down a hill, gradually getting bigger and bigger. The down-side to this method is the extra interest you are paying and the duration of payments. 

 

Debt Avalanche

The debt avalanche method focuses on paying off high-interest debt first. This method is the inverse of the snowball method, as we are attacking the high-interest debt on top of your minimum monthly payments. Once your card with the highest interest rate is paid off, you will move to the next largest one. Prioritizing paying off higher-interest debt is advantageous because you spend less time and money in debt.  

 

Debt Consolidation

Consolidating credit card debt is a strategy that takes the balances of multiple credit cards and puts them into one monthly payment. This strategy is good for people with good credit, but are overwhelmed by their debt payments. Consolidating credit card debt simplifies monthly payments and takes advantage of lower interest accounts that can be paid off faster. 

 

Debt Lasso

The debt lasso method focuses on bringing your interest rates down while prioritizing high-interest credit cards. While making minimum payments on your credit cards, figure out how much you are willing to pay on top of these minimum payments. After figuring that out, put that money towards the credit card with the highest interest rate. Set up automatic monthly payments that cover your minimum payments, as well as your extra contribution to your card with the highest interest. While these payments are being made, shop around for a 0% balance transfer credit card or low interest loan offers. Transfer balances to the new 0% balance transfer credit cards and/or low-interest loans.  

 

 

The Financial Wellness Center is happy to help you figure out a debt repayment plan that suits your needs. Give us a call, send an email, or stop by our office on the third floor of the Student Union in room 317 if you have any questions about your finances! 

(801) 585-7379 

financialwellness@sa.utah.edu 

Financial Wellness Center 
200 S Central Campus Drive, RM 316 
Salt Lake City, UT 84112 

 

 

Sources: 

https://www.nerdwallet.com/article/finance/credit-card-debt 

https://www.nerdwallet.com/article/loans/personal-loans/consolidate-credit-card-debt-personal-loan 

https://bettermoneyhabits.bankofamerica.com/en/debt/how-to-pay-off-credit-card-debt-fast 

https://debtlasso.com/debt-lasso-method/ 

 

 

Blog Search