How to pay off credit card debt fast

In a nutshell

Not only do credit cards charge higher interest rates than other financial products like personal loans, but they also use incentives like rewards points and miles to entice consumers to spend more. When you add in the fact credit cards are so convenient for new purchases, it's easy to see how families wind up in financial trouble.

• The average American household has approximately $101,915 in debt.
• That amount is spread across mortgages, student loans, and consumer debt products like personal loans.
• Some of it is made up of credit card charges, which are notoriously difficult and expensive to pay off.

4 ways to pay down debt fast

Fortunately, credit card debt does not have to be a permanent part of your financial life. Whether you have a large amount of credit card debt or a relatively small amount, now is as good a time as any to begin paying it down. This is especially true if you're paying the average interest rate on credit cards, which is currently over 21%, according to the latest data from the Federal Reserve.

That said, you should also strive to pay down your debts as quickly as you can, not only to ditch debt faster but to save on interest along the way. The following strategies can help you do exactly that, although the right one for you depends on your lifestyle and how much extra cash you have to put toward your debts each month.

1. Use a popular debt repayment strategy

Two main strategies — the debt snowball and the debt avalanche — can help you pay off your credit card debt in a speedy and efficient way, although one strategy will likely make the process slightly faster.

Debt snowball

With the debt snowball, you'll make a list of all your debts from the smallest to largest, and you'll create a budget that lets you make the minimum payment on all your debts. At the same time, you'll pay as much as you possibly can on your smallest debt each month until it's gone.

You do this over and over until each of your smallest debts disappears, and then you "snowball" your extra payments toward your next smallest debt. Eventually, you'll be left with one credit card balance … then none.

Debt avalanche

With the debt avalanche, you make a list of all your debts based on their interest rates. From there, you'll make the minimum payments on all your credit cards with the lowest rates, and you'll pay as much as you can on the credit card balance with the highest APR.

As each month goes by, you'll pay the biggest payment you can toward your highest-interest debts until they're gone. Eventually, you'll be left with your lowest interest rate debt payment, and then you will have none.

While both of these debt repayment strategies work, the debt avalanche can help you pay down debt faster since you're eliminating your highest interest rates debts first and saving more money in interest. However, the debt snowball can give you more upfront momentum since you'll reduce the number of bills you're paying on a faster timeline.

2. Apply for a debt consolidation loan

Personal loans for consolidating credit card debt are a good option for paying off cards quickly since they come with fixed interest rates, fixed monthly payments, and a fixed repayment timeline that lets you know exactly when you'll become debt-free. Interest rates on personal loans have recently been as low as 6.40%, and many personal loans come with no origination fees and no hidden fees.

Here's an example of how a personal loan can help you pay off credit cards quickly. Let's say you have one credit card with a balance of $8,000 and an APR of 18%. If you were able to pay $200 toward this credit card each month without charging more purchases, it would take you 62 months (a little over 5 years) to become debt-free. Along the way, you would fork over $4,308.98 in interest payments.

Now imagine you consolidated this debt with an $8,000 personal loan that has a 6% APR. In this case, you could opt to pay $243 per month for just 3 years (36 months), become entirely debt-free, and pay only $761.52 in interest during that time. Not only would you save 26 months of payments with this strategy, but you would save $3,547.46 in interest to boot.

3. Consider a balance transfer credit card

Another strategy to pay off credit cards fast involves signing up for a new credit card — but not just any credit card. Specifically, you would pick a balance transfer credit card that lets you consolidate debt with a 0% APR for up to 21 months.

Credit cards in this niche tend to come with no annual fee, but they do charge balance transfer fees in the 3% range. This means that, for every $5,000 you transferred to a balance transfer credit card, you would tack on $150 on average to your new balance.

That said, the interest savings with 0% APR can more than make up for that fee while helping you pay down debt faster. After all, every cent you pay during a zero-interest period goes toward the principal of your balance, thus eliminating debt on a faster timeline.

Here's an example of how a balance transfer card could work in your favor. Let's say you currently owe $3,000 on a credit card with an APR of 16%. If you were able to pay $150 per month on this card, you could become debt-free in 24 months with total interest charges of $512.69.

If you transferred this debt to a balance transfer card with a 3% balance transfer fee, you would start the debt repayment process owing $3,090. If you had 21 months to pay off your debt at 0% APR, however, you could make the same $150 monthly payment and become debt-free during that time. Not only would you shave more than three months off your debt repayment plan, but you would save approximately $422 in interest charges.

4. Use a debt relief program

Finally, consider using a debt relief program, but keep in mind that it can take time to see any progress. Also, note that debt relief programs come with their share of pros and cons, and some may not even work as you hoped. In fact, the Federal Trade Commission (FTC) repeatedly issues warnings about debt relief and credit repair scams that target indebted consumers.

"Debt relief service scams target consumers with significant credit card debt by falsely promising to negotiate with their creditors to settle or otherwise reduce consumers' repayment obligations. These operations often charge cash-strapped consumers a large up-front fee, but then fail to help them settle or lower their debts – if they provide any service at all," according to the FTC.

Even so, there are some legitimate companies out there who can potentially help you get out of credit card debt. The main types of debt relief programs include the following.

Credit counseling

Credit counseling services are usually nonprofit companies, and they help you out of credit card debt by counseling you on money management. These services will help you set up a budget that can help you pay your credit cards off over time.

Debt management plans

With a debt management plan or DMP, a third-party company will help you negotiate interest rates and set up a repayment plan that normally lasts from three to five years. You'll pay off your debts over this timeline as long as you stick with the program and don't rack up any new charges.

Debt settlement

Another option is debt settlement. This plan requires you to stop making payments on your debts and to start saving in a dedicated savings account instead. At some point in the process, the debt settlement company will use the money you saved to negotiate a debt settlement that gets you out of debt for less than you owe.