Credit Card Payoff Plan [With Payoff Calculator]

Posted by Excite Credit Union on Jan 26, 2022 11:00:00 AM

A young man sits on a couch with his credit card and laptop mapping out his credit card payoff plan.

It can be easy to push aside credit card debt and pretend it doesn’t exist, but facing it head-on is the only way to truly tackle it. If you’ve racked up a lot of debt, paying it off is going to take time and patience. Having a credit card payoff plan can help you pay it off faster — so you can get back on track to using your card more wisely and allocating those funds elsewhere!

Review our credit card payoff plan (including a payoff calculator) for steps that keep your current finances in mind. We’ll also break down and dive into more tips to steer you in the right direction when tackling your debt.

Think Beyond Your Credit Card

To begin with, Paying off your credit card debt gets a lot more difficult when you’re continually adding to it. While you’re chipping away at your debt with a credit card payoff plan, try to make use of your debit cards versus using credit. This way, you won’t be canceling out your payments by spending more money on your credit card every month.

Challenge yourself to use cash or your debit card for purchases. The action of handing over cash or seeing a balance decline on your debit card is different from a quick swipe of your credit card. You’ll think twice and be more conscious of your purchases in this way too.

Pay Off Small Balances

As a next step, pay off your debt in order from the smallest debt to your largest. The key step here is to make the minimum payments on all of your debts, except for your smallest one, which you pay as much as possible.  Then you repeat in order of debt from smallest to largest until your debt is gone.

The biggest perk of this method (sometimes referred to as the “Snowball Method”) is feeling like you’re making significant progress in your debt because amounts are being paid in full. The downside is that it ignores interest rates, so you could be racking up higher interest rates than you would with other methods.

Reprioritize Your Budget

Now that you have a better idea of what your budget looks like, prioritize your expenses. The most efficient way to begin doing this is to schedule your payments. Inconsistent payment history can quickly tank your credit and cause you to fall behind with your payoff plan. For most creditors, you can set up an auto-pay at the time your credit card is approved! 

Consider breaking your credit card payment into two installments. This helps to lower the total amount you pay over time since you’re reducing the principal balance faster this way. Use our credit card payoff calculator to further help you tackle your way to being debt-free! 

Credit Card Payoff Calculator

Try a Balance Transfer

Balance transfers are usually offered on new credit cards. A balance transfer occurs when you “pay off” one card by transferring the outstanding balance to a different credit card. 

To use a balance transfer successfully and avoid excessive interest charges, you need to budget to pay off the entire transferred balance during the introductory period. Before you agree to a transfer, also check for any fees. These one-time fees assessed on the amount you’re transferring to the credit card can add up if you’re unaware ahead of time. 

Also, make sure to read the fine print and find out what your interest rate becomes after any type of promotional rate expires. If it’s higher than the rate you’re currently paying, seriously reconsider whether the balance transfer offer is worth it. 

Don’t Focus on the Total Amount Due

As a final step, avoid focusing on the total amount due. If you focus entirely on that amount it can be intimidating. If breaking down how you’ll tackle debt month by month is stressful (especially if you have an inconsistent income), try a quarterly breakdown. This way you’ll know the exact amount you want to pay off each quarter. 

You can adjust your payments every month to what fits your needs and what you can afford to pay. You won’t feel like your credit card debt payoff plan has completely missed the mark if something comes up one month that leads you to pay less than your goal.

Credit Card Payoff Plan With Excite Credit Union!

Paying off debt successfully requires you to change your financial behavior and prioritize where you spend your money. Brainstorm ways you could simplify your financial life. The less complicated your finances, the more likely you are to manage them well!

One area mentioned above that is worth your consideration is a balance transfer. Read more to learn how balance transfers could fit into your credit card debt payoff plan. 


Topics: Budgeting, Talking About Money