You’re not alone in your debt. Most of us don’t have immediate access to cash to pay for everything we want, so we borrow money in the form of credit cards, loans, or mortgages. The average American debt is $104,215.

While this is a problem that many people share, it is still a problem. The more debt you have and the longer you hold it, the more interest eats at you and the more expensive it becomes. If you’re holding too much debt on your credit cards — specifically more than 30% of your overall limit — this credit utilization ratio can also hurt your credit score and make future borrowing more costly. 

With these consequences laid out, it’s clear that the faster you pay off your debt, the better. Here’s how to pay off debt fast.

How to pay off debt fast

List all of your debt

If you have multiple sources of debt — say several credit cards, student loans, and a personal loan — the first step to pay off debt fast is determining how much debt you have to pay off. This means keeping identifying all outstanding balances, their interest rates, any minimum payments, and payment due dates. Google Sheets — or a simple pen and paper — can be an invaluable tool for keeping track.

This can be an intimidating exercise for people with a lot of debt, but there’s no way to make a clear plan to get out of debt fast without a hard look at the numbers.

Stop using credit cards

Taking on more debt while you’re trying to pay off debt quickly can complicate things. While you’re getting out of debt, avoid taking out another loan or using credit cards, unless you can absolutely afford to pay off the balance at the end of the month. 

Cutting off credit card spending can be a challenge. It may be worth your time to look into budgeting apps or plans that divide your take-home income into sections like the 70-20-10 budget or the 50-30-20 budget. Ideally, once your budget is laid out, you’ll see how much money you can devote toward paying off debts.

And for the record: No, you cannot pay a credit card with another credit card.

Make your minimum payments

At the bare minimum, you should be setting aside enough money each month to make your monthly payments. Missing any of these, particularly missing your payments by over 30 days, will put you in credit delinquency, which can hurt your credit score and stay on your credit report for up to seven years.

Effective debt repayment strategies

Create a debt repayment plan 

Once you’ve got an idea of all your outstanding balances and made all your minimum payments, you can strategically distribute extra funds money across all your debts. One such strategy is the debt avalanche method, which focuses on paying off debts as fast as possible.

Once you’ve made all your minimum payments, the avalanche payment method concentrates any extra funds toward the debt with the highest interest rate. Focusing on paying off the most expensive debts first can speed up the entire repayment process as you save money on interest. 

Ask your credit card issuer for a lower interest rate 

Most people don’t know you can call your credit card issuer to ask for a reduced APR (annual percentage rate), which can make a difference of hundreds of dollars in interest payments. There’s no guarantee that they’ll give you a reduced rate, but you’ll be more likely to get it if you’ve consistently made on-time payments. 

Consider debt consolidation

If you have debt on multiple credit cards, you may consider consolidating your credit card debt onto one card so you can make a single monthly payment. There are two main ways you can do this: 

1. Balance transfer credit card

A balance transfer card allows borrowers to consolidate various credit card balances onto a new credit card, ideally one with a lower APR. You’ll have to pay a transfer fee (usually 3% to 5% of the total balance transferred), but it should be worth it in the long run.

The best balance transfer credit cards also typically come with a 0% introductory APR that can last up to 21 months. If you’re able to pay off your debt within that promotional period (which should be your goal), you have the potential to save a lot of money on interest.

2. Debt consolidation loan

If you have other debts in addition to your credit card debt, you can look into debt consolidation loans. These work similarly to balance transfer cards, rolling all your debts into one big loan at a lower interest rate, which will depend on your credit score. Debt consolidation loans often have higher interest rates than other loan types, ranging from 6% to 36%.

Establish a payoff date

Paying off debt is a good goal to have, but paying off debt by a specific date is even better.

Various online calculators can tell you exactly how many months you have until you’re free and clear, according to your current interest rate and monthly payments. If 6 months (or more) sounds like too much, increase your monthly payment by $50 or $100 to start and see what difference it makes.

Avoid common debt repayment pitfalls

Now that you have paid off your debt, it can be easy to rack up debt again. Those credit cards that once carried debt now have zero balances, and you may fall back into bad spending habits. It’s important to set a budget, stick to it, and plan to spend so you’ll be prepared for that expense. 

Try to stay motivated by increasing your savings and living frugally. Increasing your savings and establishing financial stability should replace spending unnecessarily and will help you stay out of debt. 

If you find your debt is overwhelming and you can’t pay it off, you can also consider debt relief options. Be aware that this is a common area for scams, but all of the services on Business Insider’s list of the best debt relief companies are legitimate organizations.

Consider debt relief

FAQs

What is the debt snowball method?

The debt snowball method involves paying off your smallest debts first, then moving to larger ones.