Investing and Debt Pay-Off

Six Tricks To Pay Off Your Credit Cards in Record Time

There are tricks to paying off credit cards that can make it less painful and speed up the process. If you are dealing with credit card debt at the moment, you are probably stressed, worried and maybe even a little afraid. It’s those negative feelings that I want to help you get rid of by presenting to you various options for eliminating the debt.

But you do have to be serious about paying them off. Some people worry about the debt but don’t take any action. They live with the stress and hope it will just “go away.” But all that happens is that the debt continues to weigh you down, increase your stress and diminish your happiness. It can keep you stuck in a job you don’t want and keep you from going after your dreams.

The biggest problem with credit card debt is that there is no collateral—meaning, there is no potential asset, like a car or home, tied to the loan. (I say potential asset because some people are negative on their car or home loans, meaning they owe more than what their house or auto is worth.) This is why it’s so important to get rid of this type of debt as quickly as possible.

Interest Rates Really Matter

One thing that the rich understand much better than the poor is how important interest rates are. Even just a small percentage of difference can have a huge impact on your finances in the long run.

For example, let’s say you owe $10,000 in credit card debt with an APR of 18% and you also have a car loan of 15K at 6.5%. Your neighbor also owes 10K in credit card debt but his APR is 8%. He, too, has a car loan of 15K but his APR is 4.5%. Let’s say you both carry these two types of debt for three years. For the sake of simplicity, we’re going to say you each pay $200 a month toward each loan. At the end of the three years, you will have paid $12,922 in total interest for both loans while your neighbor only paid $4,469. That’s why knowing your annual APR is so important.

A sample calculation using the debt calculator on
The debt calculator on that I used for the examples above.

So the first step is to try to reduce the APR. One option you may have is to transfer a balance with high interest to lower interest loan. Car loans usually have lower interest rates than credit cards so this is one worth looking at—but you must have equity in your car. For example, if your auto loan is for 10K but your car is worth 15K, then you have 5K in equity. You car is already being used as collateral so you can approach your bank and ask for a loan up to the 5K. If they approve it, you will have the loan amount deposited into your account as cash. Then you can take that money and put it toward your credit card debt.

Another option is to transfer your debt to a card offering an introductory 0% APR on balance transfers. But be careful of these. Some charge a transfer fee, which is typically 3% to 5%. The fee must be paid immediately upon transfer so be sure to read the terms and conditions beforehand. But if you owe a lot or have a high interest rate, it’s usually worth paying this fee anyway as you will still save money in the long run.

If you owe on multiple cards, you might consider paying off the the balance with the highest interest rate first but it does depend on how much you owe on each card. You’re going to pay a lot less in interest for $1,000 loan at 18% APR than a 10K loan at 8%. To figure out the difference in what you would owe in interest, I recommend using a debt pay-off calculator such as the one provided at (Type “debt pay-off calculator bankrate” into your search engine to find.)

What can you sell?

If you owe a lot, look around you. You probably have a lot of things you can sell (most Americans do). Consider any electronics, furniture, bikes, toys, your children (just kidding) or even jewelry.

But extreme debt requires extreme selling—a house, car, boat, practically everything…If you have equity in your home, consider getting rid of it. You can use the profit to put toward your credit card debt and then downsize. The same goes for any vehicles you own.

I’m always amazed at the reactions I sometimes get when I talk to people with large debts and suggest they sell their home—you would have thought I just asked them to move to the moon. But then I ask them, “Do you like being in debt? Is it creating joy in your life or stress and worry?”

Selling a home or car you like may not be an easy decision but sometimes in life we have to be grownups and make the tough decisions. If selling your home can bring you more peace in your life by helping you to get rid of a financial burden (or two since your home is probably one as well, as I describe in my article The Myths of Home Ownership), why wouldn’t you do it?

Increase Your Income

Extra income is always nice no matter what your current finances are, but that extra money can be even more important in your quest to pay off your debt. Some ways to increase your income are:

  • increase your value at work (take on more responsibility or update your skills) and then ask for a raise
  • switch to another company that’s willing to pay you more for the same work
  • get more customers (if you’re a business owner)
  • increase your prices or fees (if you’re a business owner)

Reduce Your Expenses

Although there are a few exceptions, most people get into debt from overspending and buying things they don’t even need. Be honest with yourself: Is this why you have credit card debt?

I discuss a lot on this blog about how most people have too much house, too much car, too much everything. We buy, buy, buy, often without thinking much about it. This is how most people get—and stay—in debt.

If you want to get serious about paying off your credit card debt and never getting into that kind of debt again, you have to become very selective about what you spend your money on. I talk about the importance of selective spending and how it can change your financial future in How Selective Spending Increases Your Net Worth.

This selective spending applies not just to “wants” but also to “needs.” Of course, you shouldn’t be buying anything you just want while you’re trying to pay off debt. But you can also be selective in how you spend money on the essentials, too. Go over all your bills with scrutiny. Can you find a better deal on your internet service, cell phone plan, car insurance…? There is almost always a better deal waiting for you somewhere. You just have to take the time to shop around. And since these types of expenses are reoccurring, it’s worth the effort.

Quote by Dave Ramsey: You can't be in debt and win. It doesn't work.

If you want to increase your wealth, you have to be picky about what you spend your money on but particularly if you want to get out of debt. This applies to everything, from eating out to cars to vacations. Don’t hand your precious money over to just anyone or to anything. When you’re trying to pay off debt, you will have to be very stingy. Once the debt is paid off, you can drop the stinginess down to “somewhat.”

You Can Sometimes Negotiate

If your credit card debt has gone into collections, you may be able to negotiate it down to a lesser amount. Sometimes creditors will settle for less than what you owe because they figure getting something is better than not getting anything. You may even be able to negotiate it down before it goes to collections, depending on the credit card company and your circumstances.

First, you will have to find out if the debt you owe is past your state’s statute of limitations. Depending on your state, you may not have to pay back any of the debt if there’s been no payment or activity for 3 to 10 years. This is referred to as “zombie debt” and if yours is past the statute of limitations, it’s important that you don’t agree to any further payments. Otherwise, the statute of limitations begins all over again.

Negotiating with your credit card company or debt collector will probably take many phone calls before an agreement is worked out. Be sure to do your homework in advance and get everything in writing.

Some ways that you can negotiate to pay off your debt include:

  • agreeing to lump sum settlement: This is when the company agrees to accept less than what you owe. You will make one payment and your debt will be considered settled once they receive this payment.
  • agreeing to a payment agreement: You can set up a schedule to repay the debt. You may still be able to agree to pay less than the original amount but you will probably end up paying more than you would for a lump sum settlement.
  • using a debt management program: These are offered only by non-profit agencies. A credit counselor will help you work out a plan, reduce your APR and possibly eliminate any late charges.
  • using a debt settlement company: They can negotiate on your behalf. They will collect the monthly payment from you but will withhold the money until they can negotiate directly with the collections agency or credit card company for a reduced amount.

Consider Consolidation

If you owe a lot and with different companies, you should consider consolidating your debt and getting a personal loan, where you will make one monthly payment for the total amount that you owe (plus interest). But be very careful here. There are plenty of scams and non-ethical companies that prey on people desperate to reduce their debt.

There are, however, some reputable companies. Lending Tree has a personal loan search engine that compares offers from various lenders, including APR and payment schedule. The great thing about doing it this way is that you can instantly compare offers and pick the one that gives you the best terms.

You can also approach lenders directly, You can talk to your local bank regarding a loan. They will want to know the total amount of debt, the APR on each and will want to check your credit. They will also ask you to verify your income.

Freedom Requires Action

Debt doesn’t go away unless you take action—no hiding under the covers, hoping it will disappear. But if you use most (if not all) the tricks I discussed here, you can get rid of it much more quickly. For more about how to pay off debt, check out my article How to Free Yourself From Debt and Live a Better Life.

The good news is that if you do take action, you can one day find yourself debt free. It’s your habits and attitude that got you into debt in the first place and it’s your actions and education that can get you out of it. Keep reading this blog and not only will you be debt free, you will have more money than you ever dreamed of, as well as more contentment and peace:)

Has debt been causing you a lot of stress in your life? What actions are you taking (or have you taken) to get rid of it? What will you do in the future to prevent it from happening again? I would love to hear from you. Feel free to reach out to me at to share your story. Au revoir, namaste and until next time…

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