Credit card debt can seem like an overbearing force weighing down your finances. Unlike mortgages or student loans, credit card debt is undoubtedly considered the “bad” debt. With high-interest rates, credit card debt can be costly — both to your finances and your quality of life.
But even with high-interest rates, credit card debt is often considered normal — and the numbers prove it. According to the Federal Reserve, credit card debt in the US has grown to $870 billion with the average credit card debt per cardholder is $6,028. That is a hefty amount of debt that Americans are carrying!
Imagine what else you could do with $6,028. You could contribute to an IRA retirement account, travel the world, and save towards the down payment for a house, or buy a car and even build a cushion so you could start your own business.
Money is a tool and can help you achieve your goals. Conversely, debt — and especially credit card debt — can limit your ability to live your life well.
Pay off high-interest credit card debt
Some time ago if you had credit card debt, you were stuck paying the exorbitant interest rates that can easily range from 15-30%. With a high-interest rate and only making minimum monthly payments, it may take you decades to pay off a balance of $6,000.
Luckily, there are options that can help you pay off those credit card balances.
Consolidate multiple credit card balances
Benefits of consolidating credit card balances:
- Consolidate your credit card bills into one monthly payment
- Pay off your debt faster
- Lower your overall interest rates
- Eliminate fees (no late fees, no prepayment fees, no hidden fine print)
Many banks, credit unions, and lenders offer debt consolidation loans. With consolidation, you can refinance your credit balances into one new fixed rated loan. Doing so can lower your interest rate and give you a repayment term that could have you debt-free in less time.
Contact your current financial institution and ask about debt consolidation. Keep in mind many lenders have limits as these loans are considered unsecured personal loans. Their consolidation limit might only be up to $10,000. This limit may not be enough for those with more than $10,000 in credit card debt.
Consider alternative financing
There are a growing number of fintech lending companies that offer debt consolidation loans with higher limits.
Payoff’s Credit Card Consolidation Loan
With Payoff, you consolidate credit card debt into one new loan. The Payoff Loan gives you the power to reduce multiple high-interest payments into one low-rate monthly payment.
Payoff isn’t a bank or a direct lender. They originate loans for their lending partners. Payoff uses technology and algorithms to go even further than most lenders who simply rely on a credit score alone to make a decision.
The Payoff Loan is a personal loan between $5,000 and $35,000 and they clearly state their approval criteria. They aren’t hiding what they use to make a decision.
With Payoff, checking your rate does not impact your credit score. Check your rate and terms with Payoff. You’ll have some peace of mind that it won’t hurt your credit to see if you prequalify.
SoFi Personal Loans
SoFi began as a student loan refinancing company but have been offering personal loans for some time. The SoFi Personal Loans can be used for any reason and that includes debt consolidation. With low-interest rates and a fixed monthly payment, you can get a loan to pay off high-interest credit cards.
You can borrow between $5,000 to $100,000. Applying with SoFi is done with a simple application that starts with checking your rate. Check your rate with SoFi does not impact your credit score.
Get help with an AI-powered debt advisor
Tally Credit Card Manager
Recently, I learned of a product called Tally. Tally is unique in helping people get rid of credit card debt. With Tally, you get access to a credit card management service which helps you aggregate all your credit cards and view the rates, balance, and minimum payments in one place. The AI will also share how to pay off your debt faster by suggesting how much extra in payments you’ll need to make.
To get the full benefit of Tally, you’ll need to get approved for a Tally Line of Credit. A line of credit can be used to pay off your minimum monthly payments with all your cards so you only make one payment to Tally. Or you can have Tally pay off your cards entirely like a debt consolidation loan.
With Tally, you get something more than your standard debt consolidation loan. To get started with Tally and use the Credit Card manager, just download the app and enter your credit card information. The service is free to use, but again to use its other services such as no late fees guarantee, you’ll need to get approved for a line of credit. Tally discloses you’ll need at least a 660 credit score.
Which option should you take?
That all depends on your goals. But your focus should be paying less on the debt you have and paying off the debt as soon as possible. I suggest starting with Tally and seeing what you can do to optimized your payments. But you can also easily check your rate with SoFi and Payoff too.