How To Pay Off Credit Card Debt Quicker and Save: 8 methods to pay off your credit card debt

I'm going to take you on a tour of the multiverse of realities where you pay off your credit card debt in different ways. Some of these ways took you less than 3 years to become debt free, others didn't see you debt free for 10 years. We will look at what makes the difference, how much each strategy causes you to spend on interest, and how to avoid common pitfalls. Learning from your other realities, you can make the decision on how you can pay off your credit card debt in this reality. We've spent years in the lending industry and we've studied tens of thousands of individuals' financial lives. We want to use that experience to help you figure out the plan that will help you get out of debt and live the financial life you want to live. In all these realities, you have $8,000 in balances across 4 credit cards and you are completely committed to paying off your debt. But in each reality, you take a different approach. We hope you will be able to select the reality you want to live in and achieve that debt free life. Now, where did I misplace my TVA temp ad? Paying the minimum payment. In your first reality, you just go with the flow. You are committed to paying the required minimum payment on each of your credit cards every month and you were diligent. You didn't miss a payment. Good for you. Your payments were pretty high at the beginning, but after a year, your month-to-month finances no longer felt strained. That made it easier to put the cards on automatic payment and forget about them. Then life just unfolded. By just making the minimum required payment every month, it took you just shy of 10 years to pay off that debt. Over that time, you ended up paying $5,206 in interest. In other universes, you ran into trouble right about here. You put another emergency on the card because things felt pretty good and it pushed your debt out another two years. Splitting your monthly payment. The next reality is very similar, but in this one, you had heard that you could get out of debt faster by splitting your monthly payment and making half of it two weeks early. You weren't exactly wrong, but you weren't terribly right either. You did pay off your debt two weeks earlier than you did in the other reality, but 14 days doesn't feel like much when you are talking about 10 years. The only condolence is that you saved $900 on interest over that time. Extra principal every month. In this next reality, you continued to make your payments without fail, but every month you made an extra principal payment of between $40 and $100. Some months you had to scrimp to find the extra payment, but you never let a month pass without making some kind of extra payment. In this reality, you shaved five and a half years off your debt. You paid it off in just under four and a half years. Over that time, you paid $3,366 in interest. That's a savings of $1,840 over only making the monthly payments every month. Snowball. This next reality uses the snowball strategy. Like the last one, you found $40 to $100 every month, but this time you made sure to always put the money towards the credit card that had the lowest current balance. You had heard that it's easier to stay motivated when you are seeing your debts disappear. You paid off the first credit card in 10 months. You got pumped. 12 months later, you knocked off the second one. The third card was paid off just seven months after that. You paid off your last card four and a half years after you implemented your plan. In practical terms, you didn't save any more money or time than you did when you just focused on making extra payments, but it did feel better. You felt like you were making progress and that made all the difference. Avalanche. Now let's look at the reality where you used the avalanche debt payoff strategy. In this reality, you were very mindful of the fact that your credit cards had different interest rates. You rightly realized that you could save money on interest if you put all your extra principal payments against the debt with the highest APR. And that's just what you did. You ended up paying the debt off three months earlier than the you that used the snowball method. It took you only four years and two months and you spent $3,276 on interest. This strategy works best when you have dramatic differences in the interest rates on the debt you have. If you have a high interest loan, this strategy could be super powerful. Debt consolidation. Here's a reality where you knew you had to have something on automatic pilot. You didn't want to think about scraping together an extra principal payment every single month. But you also didn't want to just automatically pay the minimum and take 10 years to get out of debt. A lot can happen in 10 years. That's a long time to be relentlessly consistent and it leaves you with very little room for financial emergencies. So you looked into a debt consolidation loan. This was huge for you. You were able to get out of debt in three years. The payment was consistent and came out of your bank account every month without you having to think about it. At the beginning, your monthly payment was actually lower than your credit card monthly minimum payment. So that was nice. But unlike your credit card payments, the debt consolidation loan payment was exactly the same every month. It was predictable and consistent. You could work your budget around it. You also made sure that you got an APR on the loan that was nearly 4 percentage points lower than the interest rate on your other debt. That meant more of your payment was going towards principal. What was really important was that you made sure not to run up your credit card balances again. You were tempted one holiday season. But you stuck to your guns and left the plastic in the drawer. If you want to check what kind of rate you could get on a debt consolidation loan in this reality, go to our marketplace page at the Yukon Project. You can apply directly to any one of our featured lenders. Behind the scenes, we will check your rate with up to 40 other lenders. Our partners will use a soft credit check. So applying won't hurt your credit score. We will show you all of your approved offers so that you can pick the loan that works best for you. 0% APR transfer. In this next reality, you heard about credit cards with 0% introductory APRs. You found a card that would give you 0% for 8 months when you sign up. You moved all $8,000 on to this card. But it wasn't completely free at first. They charged you a 4% balance transfer fee. So your balance at the beginning was actually $8,320. For 8 months, you only paid the minimum required payment. There were principal payments, but no interest. After the interest did kick in on the 9th month, you still only paid the minimum required payment. In the end, you paid off the loan in just under 9 years and paid $3,741 in interest. That was better than the reality in which you just paid the minimum, but you were still in debt an awfully long time. In a similar reality, you signed up for the same credit card with a 0% introductory APR. But this time, you made sure to add an extra principal payment every month, between $40 and $100. By adding those extra payments, you were able to pay off your debt in just over 4 years. That seems similar to other approaches, but the real magic was that you only paid $1,886 in interest over that entire time. Huge savings. Looking back, you wished you'd put more of those savings back into the extra payments. You could have paid the debt off even quicker. If you think you might want to look into a credit card that offers 0% introductory APRs for balance transfers, you can shop over 150 different cards at our credit card marketplace at the Yukon Project. You will be able to see the latest offers, terms and conditions, and rewards, so you can see if any one of them would help you achieve your financial goals. Velocity Banking. I want to show you one last reality. In this reality, you heard of something called Velocity Banking. It promised to help you leverage your entire monthly budget to help you get out of debt. Essentially, you put every free dime of your paychecks into paying down your credit card debt at the beginning of the month. Because you don't have any cash left on hand, you make all of your purchases for the rest of the month using the credit card. The downside to this approach is that you will be paying credit card interest on every purchase you make, but you had dropped your overall balance, so you were paying less in overall interest. All you had to worry about were the costs that couldn't be put on the credit card. With a little planning, you avoided any serious problem. Things went smoothly for 28 months. That's when things flipped around. At that point, the interest on your daily purchases was costing more than you were saving. Fortunately, you noticed and switched to paying off the credit card like you normally would. You got out of debt in just over 3 years and paid a total of $2,612 in interest. So here's a review of the multiverse that we looked into. You can see that the reality that got you out of debt the fastest was debt consolidation. However, you paid the least in interest using 0% APR transfer, but only when you made extra payments along the way. Neither of those options would be good for you if you can't get the right terms. But making extra payments, the snowball method, and the avalanche method can be powerful ways to go, especially if you are aggressive about making extra payments to your principal every single month. As you can clearly see, you can get out of debt. You've done it numerous ways across the multiverse. You can certainly do it in this one. The only question is which approach would work best for you right now in this reality. And if you have already lived that reality, please leave a comment below and tell us how you did it. Was it a strategy we didn't talk about in this video? If you found this information useful, helpful, or just mildly interesting, please like this video and subscribe to our channel. Thanks for watching.