How to pay off your credit cards
6 strategies to help you pay off credit card debt faster.
We’re reader-supported and may be paid when you visit links to partner sites. We don’t compare all products in the market, but we’re working on it!
Paying off credit card debt can be tough but it's a lot easier when you know your options.
A simple first step is to look at how much you owe and what you can afford to regularly repay. Then, you can start paying off the card or cards at a pace that works for you. Here are 6 proven strategies you can use to do just that.
How to pay off credit cards faster
- Make regular repayments
- Pay more than the minimum
- Focus on paying off 1 card at a time
- Consolidate debt
- Consider using savings
- Access financial support services
Need help now? Call the National Debt Helpline on 1800 007 007 to speak to a financial counsellor for free.
1. Make regular repayments
Paying on time means you'll avoid late fees (if your credit card charges them). This means you need to make at least 1 payment by the due date on your credit card statement.
If you get paid weekly or fortnightly, you could also time repayments around payday so they fit in with your routines. This makes it easier to stick to a repayment schedule.
The key is to have a realistic repayment plan. So, create a budget for your regular expenses, then calculate exactly how much money you can afford to set aside for repayments each week, fortnight or month.
2. Pay more than the minimum
Making only the minimum repayments on your account will keep you trapped in debt for longer and you'll pay more interest than you need to.
For example, a $2,000 debt at 20% interest and a 2% minimum payment would take around 9.03 years to repay and cost $2,336 in interest if you only paid the minimum amount. Repay an extra $50 each month and the debt could be paid off in 2.33 years, with $519 in interest charges.
The important thing to keep in mind is that whatever you can afford to pay above the minimum helps you save on interest charges and repay the debt faster. Whether that's an extra $5, $50 or $100 – it all helps.
3. Focus on paying off 1 card at a time
If you're paying off a few credit cards, you'll need to pay at least the minimum amount required for each account.
Beyond that, you can pick the one with the highest interest rate or the one with the smallest balance and pay more off of that card until the balance is $0. Close that account and then focus on the next one.
- Paying off the card with the highest interest rate first. This strategy focuses on reducing interest charges so you'll end up paying the least amount of interest over the long term.
- Paying off the card with the smallest balance first. This strategy focuses on reducing the number of repayments you need to make in the shortest time. Seeing 1 balance at $0 can be motivation to keep paying off the rest.
4. Consolidate debt
Another way to deal with a few different debts is to combine them into a single account. This is known as debt consolidation and helps reduce the number of fees and interest charges.
There are 3 main ways to consolidate debt:
- Balance transfer credit cards
These cards let you transfer 1 or more credit card balances onto a new card, usually offering a low or 0% interest rate for an introductory period. This rate can last up to 3 years but after that, a higher ongoing rate applies if you haven't paid off the whole balance.
- Debt consolidation personal loans
Personal loans typically offer lower ongoing interest rates than credit cards. You can get one to pay off your existing balances, then repay the total with regular, structured repayments.
- Mortgage refinancing
This is an extreme option. Because home loan interest rates are much lower, it can work for some people, especially for large credit card debts that attract a lot of interest. As an example, the average variable home loan rate on Finder's database in June 2022 was 3.23% while the average standard credit card interest rate was 19.94%.
But moving credit card debt to a home loan is risky because it is a long-term debt that is secured by your property. Before deciding to refinance as a way to pay off credit card debt, check what the repayments will be and aim to pay a higher amount if you can to help keep costs to a minimum.
5. Consider using savings
If you have savings, think about whether you can use some to help pay off your credit card debt faster.
Putting a lump sum towards your credit card balance (or balances) reduces the amount of interest charged so that more of your future repayments go towards the balance.
While it's important to have some savings set aside for goals and emergencies, remember that the interest you earn on your savings account is much lower than the ongoing interest rates charged on credit cards. Putting a bit more towards the debt now can help you with your other money goals in the future.
6. Access financial support services
If you're experiencing financial difficulties, contact your credit card provider as soon as possible to let them know. It can help you work out an affordable plan.
You can also speak to a financial counsellor for free by calling the National Debt Helpline on 1800 007 007 or through the online chat service. The website also has free resources.
Frequently asked questions
Can I pay off a credit card in full?
How can I make a credit card payment?
Your credit card statement lists the different ways you can make repayments. These usually include the following:
- Internet banking (if both accounts are held with the same bank)
- At a branch
- Australia Post
- Automatic payments for the minimum amount, the total balance or a nominated dollar amount above the minimum required amount
What if I need to make changes to my autopay?
Make sure you let your bank know as soon as possible if you need to make changes to your autopay. Generally, you need to give at least 7 days' notice to your bank if you want the changes made.
Compare 0% balance transfer credit cards
A balance transfer credit card offers a 0% interest rate for up to 36 months and gives you a way to save on interest as you pay off the debt.
We update our data regularly, but information can change between updates. Confirm details with the provider you're interested in before making a decision.
More guides on Finder
Citi Premier Card – Velocity Points Offer
The Citi Premier includes a big bonus points offer, discounted annual fee options, lounge passes and more. Get the details here.
The Future of Credit Cards report 2022
Finder’s Future of Credit Cards report explores the trends shaping credit cards and digital payments, including the rise of BNPL.
Point-to-point frustration: Why it can be very difficult to get a refund for an outrageous taxi fare in Australia
If you are overcharged by a taxi in Australia, chasing a refund is hard work. Here's why the industry needs to change if it is to survive.
American Express Corporate Platinum Card
With a 400,000 bonus Membership Rewards points offer, lounge access and management tools, is this Amex account right for your company?
American Express Corporate Card
This Amex charge card offers a mix of management tools and perks for big companies – including a 50,000 bonus Membership Rewards offer.
American Express Corporate Gold Card
Designed for big companies, this Amex charge card offers a mix of management tools and perks – including a 100,000 bonus Membership Rewards points offer.
American Express Qantas Corporate Gold Card
With a 100,000 bonus Membership Rewards offer and complimentary Qantas Business Rewards membership, is this the right card for your business?
Bank of Melbourne Vertigo – Purchase Offer
Compare the features of the Bank of Melbourne Vertigo including a 0% promotional offer on purchases and a first-year annual fee waiver.
St.George Vertigo Card – Purchase Offer
Offers no annual fee in the first year and 0% introductory rate on purchases for the first 18 months.
Ask an Expert