Written by Zach Friedman

It’s no secret that credit card debt is expensive.

Don’t have a game plan?

Here are 4 steps to pay off credit card debt faster.

Step 1: Organize your credit cards

Quick exercise: if you have multiple credit cards, write down the balance and interest rate on each card.

Let’s assume it looks something like this:

Card 1 – $10,000 balance at 17% interest

Card 2: $8,000 balance at 22% interest

Card 3: $2,000 balance at 15% interest

First, make sure you’re paying at least the minimum payment each month and not skipping any payments. Second, if you want to save the most money, first pay off the credit card balance with the highest interest rate. That would be Card 2. If you first want to pay off the credit card with the lowest balance (Card 3), you won’t save the most money, but you may get motivated once you pay off the lower credit card balance.

If you want to save the most money, continue with Card 1 and then Card 3 in that order.

Step 2: Consolidate your credit card debt

If you don’t have the money to pay off your credit card debt today, but you don’t want to waste money with a high interest rate, here’s what to do.

Consolidate credit card debt with a personal loan.

A personal loan, which is also known as a credit card consolidation loan, is an unsecured loan ranging from $1,000 – $100,000 that typically can be repaid within 2 to 7 years.

You may be asking, “Why should I get a personal loan?”

The first advantage is that you may feel less pressure to pay off credit card debt immediately. You may want the flexibility to make structured payments over a pre-defined time frame of 2 to 7 years. The second advantage is that personal loans typically have a fixed interest rate. This makes personal loans more predictable because you will have the same balance each month. Unlike a personal loan, credit card debt has a variable interest rate, which means that the interest can change and it is less predictable.

The third advantage is that if you have a strong credit score, you may be able to get a lower interest rate on your personal loan than on your credit card. For example, the average credit card APR today is 17%, while personal loans start at about 6%. Fourth, a credit card consolidation loan is considered an installment loan; swapping your variable rate credit card for a fixed rate credit card consolidation loan can help increase your debt mix and may raise your credit score.

If you plan to repay your credit card debt in this time frame and can obtain a lower interest rate than your current credit card interest rate, a personal loan is a great strategy to save interest costs.

Step 3: Get a 0% APR credit card

If you need some more time to get your financial house in order, but don’t want to accrue more interest on your credit cards, there’s another step you can take.

It’s called a 0% APR credit card and it’s an alternative to a credit card consolidation loan.

0% APR credit card gives you 0% interest on your credit card debt balance for a certain amount of time, such as 12 months or longer. Here’s how it works. With a 0% APR credit card, you can transfer your existing credit card balance to a new credit card and not owe any interest until the 0% APR period ends. Make sure you pay the minimum payment each month. Many of the best 0% APR credit cards also offer 0% APR on new purchases during the grace period as well.

Importantly, make sure to pay your credit card balance in full before the grace period ends. If you don’t, you will be subject to a high interest rate on your credit card balance.

Step 4: Use a credit card consolidation calculator

If you’re ready for a credit card consolidation loan, it makes sense to see how much money you can save.

A credit card consolidation calculator can show you quickly your interest savings compared with your existing credit card debt. For example, let’s assume that you have $25,000 of credit card debt at a 20% interest rate and $500 monthly payment. With a strong credit profile, let’s assume that you can consolidate your credit card debt with a personal loan at an 8% interest rate and five-year repayment term. In this case, your monthly payment would increase to $507 (only $7 more), but you will save $23,585 and pay off your credit card debt earlier.

The reason? The interest savings. When it comes to paying off credit card debt faster, the goal is to cut the interest so you can focus on reducing principal balance.

You can use this credit card debt calculator to see how much you can save when you consolidate credit card debt.

Photo Credit: Getty

Thanks for reading!

Carissa Abazia