This One Move Could Help You Pay Off Your Credit Cards Sooner

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It’s an easy one to make, too. 

If you’re sitting on a pretty substantial credit card balance, you’re not alone. As of the end of 2022, U.S. credit card debt had reached $986 billion, according to the Federal Reserve Bank of New York.

Of course, the problem with credit card debt is that the longer you continue to carry it, the more money you might lose to interest. The reason for this is twofold.

First, credit cards generally charge a high amount of interest to begin with. You’ll often get stuck with a much higher borrowing rate on a credit card than you will with, say, a personal loan.

Also, many credit card companies compound interest on a daily basis. What this means is that for each day you carry a balance, you not only accrue interest on your principal, but also, the interest you’re racking up. It’s an easy way to get caught in a dangerous cycle of debt — which is the exact situation a lot of consumers are in these days.

If you’re hoping to pay off your credit cards as soon as possible, there’s one move to consider making to increase your chances of success. And the best part? It’s a really easy one.

Put the process on autopilot

One reason your credit card debt might linger is that you keep struggling to free up money for debt payoff purchases. You might tell yourself, “Hopefully I won’t spend my entire paycheck this month, and whatever I save will go toward my credit cards.”

But what often happens in that situation is you do spend your entire paycheck. That’s why a good bet is to shrink your paycheck — or, more specifically, give yourself less of it to spend.

If you set up an automatic transfer that moves funds from your checking account to your savings account at the start of each month, you’ll have that much more money to apply to your credit card balance. And because you’re making that transfer happen before you get a chance to start spending down your paycheck, it’ll help you stay on track.

In fact, this move is commonly made when people want to boost their savings account balance — they set up an auto-transfer so they don’t have to think about it. But the concept works just as well in the context of paying off credit card debt.

Don’t let that debt linger

You might think that carrying a credit card balance for a few extra months is no big deal. But remember, that could result in more interest charges — and more delays to becoming debt-free. If you set up an automatic transfer from your checking account and use that money for the purpose of paying off your credit cards, you might save yourself a world of interest — and stress.

Plus, eliminating credit card debt could help your credit score improve. And that could open you up to a lot of opportunities, whether it’s getting a landlord’s approval to rent a home or getting approved for a terrific credit card offer that puts piles of cash back in your pocket.

Top credit card wipes out interest until 2024

If you have credit card debt, transferring it to this top balance transfer card secures you a 0% intro APR for up to 21 months! Plus, you’ll pay no annual fee. Those are just a few reasons why our experts rate this card as a top pick to help get control of your debt. Read our full review for free and apply in just 2 minutes.

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The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.Maurie Backman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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