Let’s face it. Credit card debt sucks. So what’s the best way to pay off credit cards?
I’m going with “plop them into your debt snowball“, of course.
That said, there are some special things to be aware of when you’re working to pay off credit cards. One, credit card fees can pop up a lot, so do everything you can to avoid them. Typical fees include over limit fees, cash advance fees, payment protection fees, late fees, and annual fees.
Obviously, if you’re trying to find the best way to pay off credit cards, you know that you should stop using the cards. Doing so should eliminate potential cash advance and over limit fees.
Make it easier to pay off credit cards by avoiding fees
Payment protection fees can go by different names, but they’re a fee you pay each month for what is essentially insurance. The protection kicks in if you can’t pay your bill for specific reasons. Usually the higher your balance, the higher the cost, so consider eliminating this unless you think a covered event is likely to be right around the corner.
You may as well put that extra money toward getting out of debt, right?
Late fees can be avoided by paying at least the minimum payment on your credit cards as soon as you get the bill. Don’t put the statement or notice aside for later, because you could forget about it or misplace it — and that could cost you. Even if you plan to pay more later to the card in question, pay at least the minimum right away. You can always go back and make additional payments later.
Annual fees are a little trickier. You can try calling the credit card company to see if they will waive the fee, but it’s likely that the only way to get rid of the fee is to close the card. So, when you get a card paid off and are ready to move on to the next one on your list, consider closing it.
Your credit score can take a tiny bit of a hit when closing credit cards, but keeping them around can cost you in annual fees.
Why pay extra to owe money?
Avoid this typical trap if you want to pay off credit cards
There’s one thing you might be tempted to do to pay off credit cards that’s not usually such a hot idea: reducing the amount of interest you’re paying by consolidating debt.
That’s because — more than anything — the best way to pay off credit cards and other debt for good is to change your habits. Don’t try to outsmart yourself and get creative — do the work instead, and you’ll get there.
P.S. If you want to track your credit score, Credit Karma offers a free credit score.