5 Ways to Pay Off Credit Card Debt You Racked Up in Quarantine

A man walks with a ball and chain around his food as he holds a credit card to represent credit card debt.
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Your hair may be shaggy, you can’t remember how driving works anymore, but you’re ready to leave your house.

But wait, what about that pile of debt you racked up since you’ve been in quarantine?

Even before the current financial crisis, people were struggling with credit card debt — 62% of people carried credit card debt in the 12 months leading up to the stay-at-home orders, according to an online NFCC survey conducted in early March. 

Remember way back then? 

With unemployment skyrocketing, it can be even more tempting to rely on credit cards for regular expenses, but your balance can balloon quickly thanks to the compound interest credit cards charge. 

Are you among those who’ve had to rely on credit cards for emergency expenses but are now ready to emerge from quarantine and credit card debt? Here are five ways to pull yourself out.

5 Ways to Pay Off Credit Card Debt Fast

You are ready to face the world again — so don’t let that nasty credit card balance ruin the fun. Here are five ways to pay it down before you re-enter society.

1. Review Your Credit Cards

It’s understandable if you’ve been operating on auto-pilot for the last few weeks (or months).

We’ve all been under stress, and sometimes it’s just easier to keep doing what’s worked in the past to avoid adding one more thing to our plates.

But if you’re struggling with debt, now is a good time to re-evaluate your credit cards’ value to you.

Start by making a list of all your cards, including your balance, minimum payment, interest rate, fees and limit — especially if your credit limit was recently cut.

Gathering all the info in one document can help you compare the cards and decide if a few changes could help.

Pro Tip

If possible, avoid cash advances and payday loans. With their astronomical interest rates, you’ll likely end up further in debt than if you stuck to minimum payments on your credit cards.

For instance, have you relied on a credit card that offers the travel rewards perks? Is the $150 annual fee worth it if travel plans are on hold for the foreseeable future? 

If you call the issuer, they might be willing to waive the fee — or maybe you need to cut your losses and switch to the card that offers you more helpful cash back rewards.

And although offers for 0% balance transfer cards may not be as plentiful as creditors tighten their lending practices, strategize how to use the cards you already have to take advantage of the lowest interest rates. 

By transferring your balance to the lowest interest card, you can help your payments go farther toward paying down your balance.

2. Strategize for Coronavirus Windfalls 

If your relief check covered basic living expenses, that money may already be gone. But if you have money leftover, don’t simply think of this as “free money.”

Instead, use the cash for your first extra payment for launching the debt snowball or avalanche method:

  • Snowball: After making the minimum payments on your cards, put all of the remaining money toward paying off the card with the lowest balance. After one is paid off, move onto the card with the next lowest balance, and so on. This method typically costs you slightly more in interest, but it offers immediate gratification when you pay off a card.
  • Avalanche: This is similar to snowball, but instead of putting your money toward the lowest balance, put it toward the card with the highest interest. You’ll save more on interest in the long run with this method.

Beyond the relief check, consider what other sources of money you’ve had freed up because of the pandemic. If you are eligible for a forbearance on your federal student loans, for instance, could some of the money you typically pay toward your loans instead go toward your high-interest credit card debt? 

If you don’t require that cash for your living expenses, your money can go farther by paying down high-interest credit card debt.

3. Try the Snowflake Method

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If throwing all your free cash toward debt is a little too scary right now, consider smaller installments via the snowflake method.

Accumulation is the key to making snowflake work. It requires you to realize all the ways you can save and/or make extra money each day — above and beyond your usual strategies. Then you apply those small amounts toward your debt immediately (because snowflake payments melt easily into other expenses).

Looking for a way to make more money? You could work from home. We post new job opportunities every weekday.

And although you might have already cut out a lot of extra expenses in the past couple months, the great thing about the snowflake method is that you can think in terms of micro-savings for your payments.

For example, you normally head to the warehouse club for bulk buying, but what if you split a few items — and costs — with friends or family? Calculate how much you saved by splitting, then put that money toward your debt.

The snowflake method is likely to produce such small results that it’s typically more of an add-on to your other debt payoff method. But if you’re nervous about having enough cash in case of an emergency, snowflakes can offer at least a little boost in your debt payments.

4. Switch to Biweekly Payments

If you’re still earning a steady paycheck, use this time to put a dent in your credit card debt — just in case.

If you’ve been carrying a balance from month to month on your credit card, biweekly payments — aka paying half the regular monthly amount every two weeks — could save you hundreds in interest.

How? Let’s say your monthly credit card payment is $500. If you pay that amount each month, you’ll make 12 payments each year for a total of $6,000.

If you make biweekly payments, you pay $250 every two weeks. But because there are 52 weeks in a calendar year, you’ll make 26 half payments or 13 full payments each year, for a total of $6,500.

That reduces your principal by $500 in one year and thus reduces the amount of interest you’ll pay on the remaining balance.

Pro Tip

If you set up automatic payments, remember that every month doesn’t have the same amount of dates. So don’t schedule a payment on the 30th, or you’ll skip one in February.

Additionally, when you have a balance on a credit card, most credit card companies offer a grace period between when a statement closes and the due date. You don’t accrue interest on the balance during that period.

But if you don’t pay off the full balance every month, you lose the grace period and start accruing interest on a daily basis. 

By making biweekly payments, you’ll not only knock out more of the balance, you’ll avoid accruing additional interest in those 14 days between payments.

5. Take Out a Loan

Trading one debt for another? No thanks, you say.

But if you can snag a loan with a lower interest rate than your double-digit charging credit card, using a second loan to pay off your credit card could be a wise solution.

Although lenders are tightening their pursestrings in light of the pandemic, you still have multiple options for loans — including some benefits available now because of the coronavirus.

  1. Personal loan.

    Applying for a personal loan can often help you snag a better interest rate than you’d get on a credit card. But if you recently lost your job, check the offer carefully — you don’t want to pay off the credit card only to be locked into a loan with its own high interest rate and exorbitant fees.

  2. HELOC or home equity loan.

    If you’re a homeowner, you can apply for a home equity line of credit (HELOC) to pay off your credit cards. A word of caution, though: If you can’t pay your credit cards, bill collectors harass you and could potentially garnish your wages. But if you can’t pay your home equity loan, lenders can take your house. So consider your ability to pay carefully before putting your home on the line.

  3. 401(k) loan.

    Thanks to the CARES Act, you can borrow up to $100,000 from your 401(k) if you’re impacted by coronavirus. While you typically repay a 401(k) loan back over five years, the CARES Act lets you hold off on making payments for a year. However, your employer sets the rules for 401(k) early withdrawals and loans, so check with your company’s HR team first. Check out these ways to limit the damage if you’re taking money from your 401(k).

Although it may be tempting to forget about your credit card debt when the fresh air is calling, you’ll be able to enjoy life on the outside more if you get your financial house in order first.

Tiffany Wendeln Connors is a staff writer/editor at The Penny Hoarder. Read her bio and other work here, then catch her on Twitter @TiffanyWendeln.