How To Pay Off High Interest Credit Cards Fast

how_to_pay_off_credit_card_debtBack few years ago I had a lot of credit card debt.  In fact it was starting to put a real dent in my finances, at one point I was literly living paycheck to paycheck which were some really scary times my wife and I.

However I was able to pull through with a little know how and persistence, and I can honestly tell you if you apply what I’m about to teach you in this article I will teach how to pay off your credit cards fast.

Tools You Will Need

To start before we dive into the plan you will need some tools to help you along the way.  The first tool you could use on how to pay off credit cards fast is the Excel Debt Snowball worksheet offered by Vertex 42.  This is a free excel sheet and is what I’m going to be using in this article to explain how to do this.

The second option is use a program called DebtGoal.  This is a company that specializes in setting up a debt plan for you but is much more sophisticated.  This program cost $12 a month to use and may be well worth your time since it includes real time pay off features and enables you to link your accounts directly to the program.  To learn more about this option check out my DebtGoal Review.

Step 1: Enter Your Debts

To start you need to gather all of your credit cards debts and enter them into the chart.  It will look something like the picture below.


Once you have the spread sheet up and running simple fill out the columns as follows.  Add your creditors name, the balance owed, the current interest rate you are paying, and the minimum payment.  Don’t worry about the custom column that will be taken care of automatically.

I should also mention it’s very important that you only put the minimum payment down for each debt.  The reason for this is because by making the minimum payment it will allow you to push excess funds towards other debts allowing to focus on one debt at a time.

Step 2: Determine Your Extra Payment

Now that we have are credit cards added to the program we need to determine how much extra to pay towards are debts.  One of the fastest ways to pay off credit cards is to pay at least an extra $100 a month towards the program.

To start, if you want to pay of high interest credit cards consider looking at your current budget and see were you can plug some leaky holes.  One place I’ve found a lot of extra money being wasted was with credit card fees.  In fact one of my creditors was charging me a fee every month for payment insurance.   I called them and had it removed.

Secondly,  I know times can be tough but one of the best ways to come up with the extra money is by cutting all of your payments down to the minimum payment possible.

Finally, if that’s not a possibility consider finding a part time job.  I once new a guy who was looking to earn some extra cash so he took up a paper route.  It’s not hard to earn an extra $100 a month if you just take the time to look.

Step 3: Choose Your Plan

Now that we have our extra payment figured out the next step on how to pay off high interest credit cards is to choose the type of plan you want to use to pay off your debt. Their are two basic plans and they are as follows:

Debt Snowball Plan.  This plan will pay off your debts starting with the lowest balance first. With this plan you will see the fastest results since you will be paying lower balance debts.

Debt Avalanche Plan. This plan works by paying down debts with the highest interest first.  This plan works great if you have a lot of debts with really high interest rates, otherwise I suggest you go with the debt snowball plan.

For this article I’m going to be using the Debt Snowball Plan.

Step 4: Start The Plan

Now that we have all of are debt info in place, the extra payment amount of $100 determined, and the type of plan we want to go with let look at how the plan works.

This plan is very simple, all you have to do is follow the payment plan.   In our example below we can see that Merchant Card 1 is the first card to pay off  since it has the lowest balance.  So you will pay the minimum payment plus a $100 towards this debt until it’s paid off.  It will look something like this.

  • Merchant card 1 payment $25 + The Extra Payment of $100
  • This would come to a total Payment of $125

Then once the first debt is paid off you will move onto the second debt which is merchant card 3.  With this debt you will pay the minimum payment on this card, plus the minimum payment you were paying on merchant card 1, plus the extra payment of $100.   It would look something like this.

  • Merchant Card 1 $25 + Merchant Card 3 $57 + Extra Payment $100
  • This would be a total payment of  $162.

Once the second debt is paid in full rinse and repeat.


Finally, in this plan it shows that if you would follow this plan all the way through you would have your first debt paid off in 3 months and you would pay off your final debt in just over 2 years and only pay $1,789 in interest.  Obviously, this would be a lot faster than paying a little money towards each debt.

Step 5:  Don’t Add Anymore Debt

Now that the plan is in place on how to pay off credit cards quickly their is a very important guideline you need to follow in order for this plan to come together correctly, and that is not to add anymore debt while working through this plan.

If you continue to add debt towards your credit cards it will only delay you to paying off your debts.  So in order to avoid this take all of your credit cards and put them in a place to avoid them.  My philosophy has always been out of site out of mind and you won’t have the temptation should it arise.

Are You Ready To Get Out Of Debt

In the end when you consider this plan on how to pay credit cards off fast it carries several benefits.  The first being that it will save you a ton in interest payments, secondly it will keep you on track and working towards your goal, and finally it works fast.

To get started download the spread sheet or sign up with DebtGoal and you will be on your way to debt freedom fast.  Also feel free to add your thoughts as to how to pay off your credit cards faster and ask any question you might have about this plan.

This post was featured on the Carnival of Personal Finance by Boomer And Echo.

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