# How Long Does It Take To Pay Off A Credit Card

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Credit cards can make it easier for consumers to pay for goods and services. Instead of worrying about having exact changes or having enough funds in your checking account to cover the transaction, you can use your credit to pay. Credit card issuers even provide rewards for their users, but a gloomy picture can emerge if you fall behind on payments.

Double-digit interest rates make it important to stay out of debt and pay off existing debt as quickly as possible. If you are wondering how long it will take to eliminate your credit card debt, this article will provide some insights. You will also learn ways to accelerate your path to a debt-free credit card experience.

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## How long will it take to pay off your credit card?

The length of time it takes to pay off your credit card debt depends on several factors. Your current balance is the best indicator, but the interest rate can result in a debt snowball if you do not prioritize repayment. Some people stay in debt because they have difficulty managing the interest on top of their credit card balances. A higher monthly payment that exceeds the minimum requirement can help get you out of debt faster.

While paying off a credit card has several variables, you can use this process to figure out how long it will take to repay your credit card debt.

Step 1: Divide your credit card’s annual percentage rate (APR) by 12. If you have a 20% APR, the monthly rate is 1.67%

Step 2: Determine your credit card balance. This example will use \$5,000 as the credit card balance.

Step 3: Give yourself a goal for how soon you want to pay off the credit card debt. This example will assume you want to pay off the credit card within one year. Use 12 months for the equation.

Step 4: Divide the credit card balance by the time interval. In this example, the \$5,000 credit balance divided by the 12 intervals (months in this example) is \$416.67 per month. This represents the interest-free payment, but the calculation must also reflect the interest rate.

Step 5: This is the final step. Multiply the monthly payment by (1 + the monthly APR). Convert the 1.67% into 0.0167 in the equation. In this case, it’s \$416.67 x (1 + 0.0167) = \$416.67 x 1.0167 = \$423.63 per month.

You would have to pay \$423.63 per month for 12 months to pay off a \$5,000 credit balance with a 20% interest rate.

Here is the final equation:

Monthly payment = (Credit card balance / 12) x (1 + (APR / 12))

Monthly payment = (\$5,000 / 12) x (1 + (20% / 12))

Monthly payment = \$416.67 x (1 + 1.67%)

Monthly payment = \$416.67 x 1.0167 = \$423.63 per month

This formula does not include additional purchases. For example, if you spend an additional \$500 on your credit card in one month, you would have to make a \$923.63 credit card payment that month to be on pace to become debt-free from that card in one year.

## Tips for paying off your credit card faster

The formula provides some hints that can help you pay off your credit card faster. Untangling the key components of the formula reveals useful strategies to pay off your credit card faster. These tips can make a difference and speed up your path to no more credit card debt.

### Make more than the minimum payment

The minimum payment keeps you in good standing and helps with your payment history. That’s all credit card issuers want, but this strategy also puts more money in their pockets. Each time you only make the minimum payment, the remaining balance accumulates interest. You should strive to make more than the minimum payment so you can eventually become debt-free.

You can only increase your monthly credit card payment by increasing your income or minimizing your expenses. If you have never reviewed your expenses, doing so can prevent immediate wins. Reviewing your expenses and budgeting accordingly can open up additional cash you can use to trim down your credit card debt. Spending less per month also generally slows down how quickly your credit card balance grows.

### Snowball debt repayment method

The snowball debt repayment method emphasizes small wins. If you have multiple debts, focus on paying the smallest ones first after making the minimum payments on all of your loans. Having fewer debts can increase your focus instead of getting distracted by many small debts.

### Avalanche debt repayment method

The avalanche debt repayment method saves more money than the snowball method. Both of these methods encourage borrowers to make the minimum payments all across the board. But instead of tackling your smallest loan, avalanche debt advocates use the remaining funds to pay off debt with the highest interest. It does not make much sense to prioritize a small debt with a 1% interest rate when you could use those same funds to reduce an installment loan or line of credit that has a 20% interest rate.

### Debt consolidation

Credit cards have high interest rates, which makes it difficult to stay on top of the balance. Debt consolidation is one solution to this problem. You can possibly get a personal loan or other financial product with a lower interest rate. You can use the proceeds from that loan to repay your credit card debt. You still have the loan, but you will likely have lower monthly payments because you have a lower interest rate. You can also extend the loan out a few years to minimize the loan’s place in your budget.

MoneyLion offers a service to help you find personal loan offers. Based on the information you provide, you can get matched with offers for up to \$100,000 from our top providers. You can compare rates, terms, and fees from different lenders and choose the best offer for you.

### Debt refinancing

Debt refinancing modifies the current terms of your loan and replaces them with a new loan. You can add more time to your loan if you want to reduce monthly payments. Shortening your loan’s duration will increase monthly payments but also get you out of debt sooner. Some people also refinance for a lower interest rate. If you took out a debt consolidation loan with a 600 credit score and have since raised your credit score to 700, you could probably qualify for better terms if you do refinance the loan.

### Transfer balance card

A credit card balance transfer temporarily eliminates APR from the equation. Most credit cards have 0% introductory APR programs. You likely won’t have to worry about interest accumulating for six to 18 months, depending on the length of the special offer. You can use this window of opportunity to get out of credit card debt sooner. Bear in mind that balance transfers typically come with fees, usually a percentage of the transferred amount.

Recommended: Best Balance Transfer Cards for Fair Credit

## Pay off Your Credit Card One Day At A Time

Most people cannot wipe away their credit card debt in a single day. Finding opportunities to trim expenses and increase your monthly credit card payments can get you debt-free sooner. Finally seeing \$0 on your credit card balance is a rewarding feeling, and it gets easier to stay at a \$0 balance once you reach that level.

## FAQ

### What happens if I only make the minimum payment on my credit card?

If you only make the minimum payment on your credit card, your card will remain in good standing, but the remaining balance rises because of the interest rate.

### How soon will paying off credit cards raise your credit score?

Credit card issuers send your recent payment history to the major credit bureaus once a month. Depending on when you pay off your credit card, it can take up to a month for that activity to reflect in your score.

### Do you build credit if you pay off your credit card immediately?

You will build credit if you pay off your credit card immediately. Getting rid of debt immediately strengthens your payment history and reduces your credit utilization ratio.