The Fastest Way to Pay Off $10,000 in Credit Card Debt
This post contains references to products from our advertisers. We may receive compensation when you click on links to those products. The content is not provided by the advertiser and any opinions, analyses, reviews or recommendations expressed in this article are those of the author’s alone, and have not been reviewed, approved or otherwise endorsed by any bank, card issuer, airline or hotel chain. Please visit our Advertiser Disclosure to view our partners, and for additional details.
I personally paid off over $10,000 in credit card debt in my early 20s using a very simple strategy. My 2-step plan will reduce your payments, pay down debt faster, and improve your credit.
Step 1: Save Thousands By Stopping Your Interest Payments
First recognize you have to stop paying interest. If you keep paying interest, you’ll make little progress towards paying off your debt.
For example, if you owed $10,000 credit card debt and paid $250 a month:
- $177 of your $250 payment would go towards paying interest. That's $177 of your payment pocketed by the credit card company for free!
- Only $73 (29%) goes towards paying down the $10,000 principal.
- At this rate, it would take 69 months to pay off your debt, and it would cost you a staggering $7,535 in interest!
This is an uphill battle you simply can’t win. You need to stop paying interest ASAP.
How do you legally stop paying interest?
Find a credit card with a 0% introductory balance transfer APR offer (see my recommendations below for the best card). Thanks to the recovering economy, banks have been offering the best promos and longest 0% APR intro periods I've seen since before the financial crisis in 2008.
Apply for a card and immediately transfer all your credit card debt to the new card. By eliminating interest for 18 months, you can pay off the entire $10,000 debt two years faster and save $6,006 in interest!
Step 2: Develop Your Payment Plan
Take your credit card debt and divide it by number of months in your 0% introductory balance transfer APR period. For example, say you owe $5,000 and got an 18-month 0% APR balance transfer card. Your monthly payment should be $277:
$5,000 / 18 months = $277 monthly payment.
That is still a big payment. But at least you are no longer paying interest, 100% of your payment goes towards paying down your debt.
But even if you can't swing that amount, start by getting a 0% APR card and paying more than the minimum every month. The new card will give you a huge head start on eliminating the entire $10,000 debt. Check out this chart to see how you'd save $3,298 in two years by using a card with a 0% intro APR for 18 months.
Every day you wait adds more interest to your debt. If you’re reading this article right now it means you’re serious about paying off debt. Act now and take advantage of your current momentum.
The first small task is to find the right 0% balance transfer credit card. It will only take a few minutes since I’ve already done the research for you. After researching hundreds of credit cards, I found the best cards for paying off debt:
BankAmericard® Credit Card
If you need a really long payment period, the BankAmericard® Credit Card is the card for you. It offers 0% intro APR on balance transfers for 18 billing cycles, one of the longest introductory periods currently offered by credit cards. This introductory rate applies to balance transfers made within 60 days of opening your account, and there is a transfer balance fee of 3% (min $10). If you can't pay off the whole balance in 18 months, the regular APR is the lowest available on this list at 11.49%-21.49% variable for both purchases and balance transfers. There is no annual fee.
The Chase Slate® card is the only card on this list that allows you to save with a $0 introductory balance transfer fee, 0% introductory APR for 15 months on purchases and balance transfers, and $0 annual fee. Plus, receive your Monthly FICO® Score for free.(Balance transfers must be made within the first 60 days for the fee to be waived. After that there will be a 5% or $5 fee, whichever is greater.) If you have a big balance to transfer, avoiding the typical 3-5% fee saves $300-500 on a $10,000 balance transfer.
BankAmericard Cash Rewards™ Credit Card
The BankAmericard Cash Rewards™ credit card is good for people who have less than $5,000 in credit card debt and would like to earn cashback rewards. If you have a smaller balance to pay off, the 12 billing cycles of 0% intro APR period might be long enough. Once you've paid off your balance, use this card to earn 2% cash back at grocery stores and wholesale clubs and 3% cash back on gas for the first $2,500 in combined spending each quarter, and 1% cash back on all other purchases. Bank of America customers get can a 10% bonus if you redeem your cash back into a Bank of America checking or savings account. This card is a great day-to-day card for earning the most cash back on gas and groceries. There is no annual fee.
Citi® Double Cash Card - 18 month BT offer
The Citi® Double Cash Card - 18 month BT offer from our partner Citi is a great card for those who want cash back but don't want to worry about keeping track of categories. This card actually offers cash back twice: 1% cash back when you buy, plus another 1% cash back as you pay for those purchases. Unlike many other cards, this card has no category restrictions, no enrollments in rotating categories, and no limits on the amount of cash back that you earn. There is a 0% introductory APR on balance transfers for 18 months. After that, the variable APR will be 14.24%-24.24%, based on your creditworthiness. There is no annual fee.