Last updated on November 3rd, 2020
Credit card debt is something millions of Americans deal with regularly. According to the Federal Reserve in New York, Americans owe more than $14.3 trillion in total debt – $4.12 trillion being partly made up of credit card debt. Fortunately, there are quick and efficient ways to repay debts. But what are the cheapest ways to pay off credit card debt?
Quickly Paying Off Credit Card Debt: At a Glance
- Balance transfer credit cards and debt consolidation loans are the two fastest – and cheapest – ways to pay off credit card debt
- Balance transfer credit cards offer low introductory APRs for paying down debt
- Personal debt consolidation loans provide a lower everyday interest rate for paying off debt
- The Upgrade Card is the best of both worlds – featuring a debt consolidation loan, a low APR, and the purchasing power of Visa
The Cheapest Ways to Pay Off Credit Card Debt – Fast
The two most effective methods of cheaply paying off credit card debt are via balance transfer credit cards and personal, debt consolidation loans.
Balance Transfer Credit Cards
Balance transfer credit cards are an excellent option for paying off credit card debt. The balance transfer process is relatively simple:
- Apply for a balance transfer credit card
- Submit a balance transfer request with your application, including all relevant bank and credit card information
- Pay off the existing balance once it’s added to your new credit card
Balance transfer cards usually offer a 0% intro APR period, which makes them ideal for paying off a credit card balance without the added interest charges.
Debt Consolidation Loans
Debt consolidation loans, also known as personal loans, are another quick way to pay off credit card debt. Personal loans come from a variety of lenders, including popular options like Upgrade, Smarter Loans, OppLoans, and Even Financial.
Debt consolidation loans offer several benefits versus balance transfer credit cards:
- Personal loans provide a lower interest rate than credit cards. The average APR for a balance transfer credit card is approximately 16.99%. Many debt consolidation loans feature interest rates in the 10% range, making them more affordable over the length of the loan terms.
- Debt consolidation loans streamline the repayment process. Using a personal loan to pay off debt allows users to make one payment each month – instead of several credit card payments.
Debt consolidation loans have some disadvantages, however. The costliest of these concerns is the fact that many lenders charge an upfront closing cost to complete the loan. Closing costs can run into the hundreds – or thousands – of dollars, which may increase the amount an individual must repay.
The Upgrade Card – The Best of Both Worlds
The Upgrade Card is a unique approach to quickly pay off credit card debt. The card is a hybrid – a mix of debt consolidation and personal loan and a balance transfer credit card.
The Upgrade Card works by extending a credit line of up to $20,000. The card is a hybrid product, working both as a Visa credit card and a type of personal loan. Cardholders can use their Upgrade account to transfer their credit line to existing accounts, paying them off to create one balance. In this regard, the Upgrade is akin to a debt consolidation product.
- Earn 1.5% unlimited cash back on card purchases every time you make a payment
- Combine the flexibility of a card with the low cost and predictability of a loan
- $0 fees - $0 annual fee, $0 activation fees, $0 maintenance fees
- No touch payments with contactless technology built in
- See if you qualify in minutes without hurting your credit score
- Great for large purchases with predictable payments you can budget for
- Regular Purchase APR: 8.99%-29.99% variable based on creditworthiness and the Prime Rate
Interest rates with the Upgrade Card start as low as 6.99% and Upgrade offers individual repayment plans, ranging from 12 months to 60 months. Studies show that this blend of low APR and personalized repayment plans reduce the costs of paying off debts.
This process allows individuals to pay off their credit card debt and save money towards emergency funds at the same time – just by making the minimum payment each month.
Related Article: How Long Does It Take to Repair Your Credit Score?