Here are some common strategies to boost your payoff speed:
Debt snowball: You focus on paying off your smallest debt first (while paying minimums on the others), then roll the amount you had been paying on it into payments on the next largest.
Debt avalanche: You pay off your debt with the highest interest rate first (while paying minimums on the others), then the next highest rate, and so on. It may save you time and money over the course of your debt payoff.
Debt consolidation: Combine multiple old debts into a single new one, ideally at a lower interest rate, making payments more manageable or the payoff period shorter. There are a few ways to consolidate debt, including balance transfer cards and personal loans.
Debt management plan: If you’re facing a mountain of credit card debt and not making much progress, a nonprofit credit counseling agency can set up a debt management plan to cut your interest rate and put you on a repayment plan. (View Highlight)
You likely don’t qualify right now for balance-transfer credit cards, and if you can get a personal loan for debt consolidation the interest rate will be high. But you still have options:
There are a number of ways to consolidate debt; the best one for you depends in large part on your credit.
Balance transfer credit cards with an introductory 0% APR mostly go to people with good to excellent credit. They’re best when you have $15,000 or less in debt and can pay it off in 21 months or less. (View Highlight)
Consider a personal loan to consolidate several debts into one at a lower interest rate. For people with good or excellent credit, these loans often have lower interest rates than credit cards.
You might be able to get a personal loan to consolidate several debts into one at a lower interest rate. These loans often have lower interest rates than credit cards.
If you can’t qualify for a personal loan at the interest rate you’d like — or if you just need some outside structure to be successful — consider a debt management plan. (View Highlight)
5 tips for paying off debt
Really know your budget: Making the most of each dollar coming in and going out will help you stay focused as you pay off your debt.
Lower your bills: By cutting what you’re paying toward bills every month, you’ll have more cash to put toward your debt payoff.
Make more money: Pick up a side hustle or two and increase your earning power. Some can be done online and have flexible hours.
Consider consolidation: Debt consolidation, with a personal loan or a credit card, can lower your interest rate so you’re putting more money toward your balance.
Don’t be afraid of debt relief: If you’re not making any progress on your debts, you might want to get some help in the form of debt relief. (View Highlight)