What’s the Cheapest Way to Pay Off Credit Card Debt?

Credit card debt doesn’t have to cost a lot of money.

There are still ways to save even if you can’t make a large payment to reduce your credit card balances.

These are five repayment strategies that can help you spend less money on interest and keep borrowing costs low.

Take an inventory of your debt

Start by identifying your most expensive debt.

If you have multiple credit cards, compare their APRs. Not all credit card APRs are equal. It’s important to understand which credit cards have higher interest rates so that you can tackle the most expensive debt first.

Pay the higher-interest balance first

A popular strategy to pay off credit card debt is the “avalanche” method.

With the avalanche method, you make the minimum payments on each of your credit cards, but make extra payments toward the credit card with the highest interest rate. After you pay off that balance, you work on the card with the next highest interest rate and so on.

This strategy eliminates the most expensive credit card debt first, which usually means you pay less total interest over time.

Avoid unnecessary spending that will add to your balances

Paying off credit card debt is much harder if you’re continually making purchases and adding to your debt.

Try to avoid unnecessary spending while you’re paying down your balances. Some borrowers find it helpful to stop carrying their credit card or delete saved payment information from their online shopping accounts or phones.

If you have any extra money, consider putting it toward your highest-interest credit cards. This can help lower your balance and future interest charges.

Look for lower-interest borrowing options

If you can’t make larger payments, you can focus on replacing expensive debt with lower-interest debt.

Credit card APRs typically have higher interest rates than other financing options. However, the credit card industry is also one of the most competitive industries.

You might be able to shop around for another credit card with a lower interest rate or a specialized balance-transfer credit card for a lower APR.

Personal loans for debt consolidation could also have lower interest rates than credit cards. Unlike credit cards which allow you to make minimum payments and carry a balance for years, loans have a fixed monthly payment and a set repayment term. This structure can help you pay off your debt by a specific date instead of lingering indefinitely.

If you’re a homeowner, you might qualify for a home equity line of credit, or HELOC. Because a HELOC is secured by home equity, it often has a lower interest rate than credit cards or other unsecured debt.

Keep making payments on-time

It can be discouraging to see a large credit card balance, but don't stop making payments.

Interest adds up until your balance has been repaid. Credit card interest typically accrues daily, so it’s important to continue making payments. Even minimum payments help reduce your balance.

Missed payments can also impact your credit score negatively, which might make it harder to qualify for lower-interest loans or better financing options in the future.

The bottom line

The cheapest way to pay off credit card debt is to choose a repayment strategy that reduces the interest you pay over time.

Paying off your highest-interest balances first, avoiding unnecessary spending, exploring lower-interest borrowing options and making consistent payments can all reduce the total cost of your debt. Focus on the total amount you'll repay, not just your monthly payment.

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This post is for informational purposes only and does not provide any financial, investment or tax advice. The information presented may not be suitable for your individual circumstances. Before making any financial decisions, consider consulting a qualified professional who can provide advice based on your specific situation.