The Best Way to Pay Off Credit Cards, Plus a Common Trap to Avoid

By Jackie Beck   Updated 05/19/2021 at 5:46 pm

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.

The best way to pay off credit cards

23 thoughts on “The Best Way to Pay Off Credit Cards, Plus a Common Trap to Avoid

  1. I am a big fan of consolidation. If you can get a great rate from a bank on interest, a consolidation can really help expedite the paying down process. You can apply a larger amount to the principle and the total goes down. Not only do you stay motivated but you reach the end of the road quicker.

    1. Consolidating is a nice way to reduce interest, BUT generally speaking people who “get out of debt” by consolidating often end up even deeper in debt than before.

  2. I am not an expert on debt reduction, but that is because I have avoided debt at all costs. Needless to say, this post (and site) is helpful for me to understand some of the dynamics of debt. I do like your point about not putting the bill off to pay later. You will often forget about it. I have put reminders in my phone just to make sure I pay the credit card on time. :)

  3. I usually transfer all of my debt onto one card with a 0% interest rate for 12 or 18 months. I just got an offer for 18 months at 0%, but I just recently took them up on their 12 month offer. Those are the best ways of paying off your credit cards because you get 6, 12 or 18 months at no interest. They charge you 3% of the balance transferred so if you are paying $250 in interest each month, then its worth it. This way you can pay down your debts without paying the interest. My mother was great about this method. She paid all of her credit card debt without pay much interest over many many years.

    The only problem with this method.. you have to have decent credit to get these offers. Even if you have bad credit, you can work your way up to a level of ‘decent’ credit and then ask the credit card agency if they can offer you a 0% balance transfer.

    1. That’s a good way to pay less interest, if the balance transfer fees are low. But it’s not necessarily the best way to pay off credit cards, because it lead to the same problem that consolidating debt can: you feel like you’ve paid off your credit cards, even though all you’ve done is moved the debt to a different card. The danger is that you might charge up the now-empty cards again.

      1. This plan is for someone whose actually interested in paying off their debts. When you transfer the debt to a new card, you cut up the old one. I know it takes discipline but if you follow this strategy then you pay much less in interest over the life of the debt. Otherwise you are paying down the debt and also paying a bunch of interest along with it. Of course most people don’t have the discipline to do this and will most likely build up new debts on different cards, knowing they are saving money on ‘deferred’ interest.

        I had to put a large purchase on a credit card a few months ago and the interest alone was just over $200. That debt will be paid off within 6 months but by transferring it I save close to $800 in interest and if I wanted to wait, I could drag out paying it off for 12 full months.

  4. I really like your recommendations. These are some really specific and helpful things to consider. Those with debt need to realize the fees add up really fast.

  5. These are great recommendations especially because you have paid attention to the psychological component of paying off debt. If we were all logical human beings, we most likely wouldn’t have mountains of debt!! Managing the psychological pieee is equally as important as figuring out the best debt payoff method.

    1. I’m with bloggette on this one!

      Cancel the cards, except for one, but freeze that one in a sheet of ice and put it in the freezer just for emergencies…

      1. Funny, I plan to write about emergencies next week. I think it’s much better to set aside money for an emergency, instead of setting aside a credit card.

  6. I agree! Pay off all the debt you want, but if you don’t change the habits that got you there, it doesn’t matter!

  7. When I had difficulty paying the balance on my card, I decided to consolidate it with my third card, transferred the balance and then cancelled it. I did the same with my second card. Now, I am maintaining only one card, which I use only for large purchases and pay the balance off every month. Less hassle, less stress.

  8. If I cancel my insurance coverage on my credit card will this effect my credit score?

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