The Easiest Way to Pay Off Credit Card Debt

Whether it's due to an education, a car, a medical emergency or a home, almost everyone carries some amount of debt in their lifetime. For some—particularly the hyper-disciplined and goal-oriented—it's probably not a lot. For others, debt can pile up quickly.

The good news is, whether you carry a lot of debt or just a little bit, paying off your credit card doesn't have to be a huge ordeal. Whether it's to celebrate a new year or just to achieve another goal in your life, Mountain America Credit Union is here to help you focus and get out of credit card debt.

So, how do you pay off credit card debt?

First, the easiest, and most important, step to achieve this goal is a plan. If you don't make a plan, your efforts will be unorganized and maybe even duplicated—hence, wasted. Begin by tracking every dollar you spend for an entire month. This will be your baseline. Then, set aside a couple of hours and gather the following materials:

• A calculator

• A pad of paper

• A pen or pencil

• Copies of income statements, bills and loan statements(printed or online)

Once you've got your materials together, you can put your plan into action.

Step 1: Add up what you owe on all credit cards.

Using all those materials, figure out what you owe. Depending on your personal prefrence, we recommend a spreadsheet, a piece of paper or an online budgeting tool to help you get started.

Make a note of which credit card carries the highest debt and the highest interest fee.

Step 2: Stop adding to your debt.

When it comes to credit card debt and interest fees, making your minimum credit card payments isn't going to be enough. Take a long, hard look at your recent charges and try to find out where you can cut back on non-essential spending. For a lot of people, this means eating out less and cooking more; opting for a Netflix film instead of the movie theater, and shopping second-hand rather than at the mall.

Getting out of credit card debt isn't easy, but making a few life changes can make it a whole lot simpler.

Step 3: Tally up your essential monthly expenses.

Once you've made your cuts on non-essential spending, you can organize your essential expenses. Using the same spreadsheet, paper or app as before, calculate your living expenses like food, shelter and gas.

Add those all together and make a note of the final cost.

Step 4: Determine what you can pay toward your debt.

Add up your income—include your day job, any freelance gigs, child support and any other sources of money—and deduct the living expenses you tallied in Step 3. Whatever is leftover can be put toward hobbies, home improvements, concerts and more. You should, however, strive to put a large portion of it toward paying off credit card debt.

Some months, it'll be easy to allocate money to your debts. Other months, it'll be trickier. The important thing to remember is that the best way to pay off debt is to do it consistently. Try to pay a set amount each month and, when you can, pay a little extra.

Step 5: Negotiate lower interest rates.

Once you have a spending plan, revisit your notes from Step 1. You're likely asking yourself which credit card to pay off first—and you aren't the only one.

There are a couple ways to pay off credit card debt. Different financial advisors may provide different advice, but many people opt to start with the lowest debt first. Paying that off first could give you the motivation you need to tackle the other ones. Others prefer to start with the credit card that charges the highest interest fees. This method will save you more money in the long run. Ultimately, it's up to you to decide which method will keep you inspired.

But before you make a decision, look at each credit card and its corresponding interest rates. Call each lender and ask if they will lower the rate for you. Tell them how long you've been a customer and how you plan to make regular payments. If they say no, keep calm and try again in a few days. Always be kind and respectful, ask to speak to a supervisor and mention offers you may have received from other credit card carriers.

Step 6: Search for deals.

If you're not getting anywhere with your current credit card companies, you can start to look elsewhere.

A credit card with a balance transfer offer could be a great option to help you reduce or even consolidate credit card debt. Compare balance transfer fees, interest rates (introductory and regular) and annual fees. Read the fine print to make sure you understand all the terms. If you find one that makes sense, apply for the card and make the transfer. But be very careful not to run up charges on the other card now that it has a $0 balance. Better to leave it for emergencies or charge only those things you can pay off immediately.

Step 7: Set up your payment plan.

Paying off credit cards in full is just not a reality for most people. For most of us, setting up a debt payment plan is more realistic and more comfortable.

Focus on one credit card at a time—prioritize them by the highest interest rate to the lowest. Out of the total amount of money you’ve earmarked for your credit card payments (determined in Step 4), organize it so that the largest chunk goes on the card with the highest interest. The second-highest should get something less, but still more than the minimum payment and then any other cards should just get the minimum payment. Continue like this until your debt has been paid off. Keep in mind the time frame on any low-interest introductory periods in your plan.

Step 8: Earn more.

Cutting back on unnecessary expenses is only half of it. Explore ways to make more money, too—by selling your unused items, freelancing, picking up jobs on sites like Taskrabbit or Fiverr or turning your hobby into a source of income.

Paying off your debt is an amazing thing to do for yourself—and it’s completely doable! All it takes is commitment, dedication and a focus on why you’re doing it. If you begin to feel overwhelmed at any point, consider talking with a credit counselor or meeting with an expert at your financial institution who can help you achieve your financial goals.

Some credit unions, like Mountain America, offer limited promotions on balance transfers such as cash back. That’s right! During these promotional periods, we’ll actually pay you when you complete a balance transfer on a new Mountain America Visa® credit card. What a great way to get started on paying off your credit debt, right? Visit our website today to learn more, or apply online!