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Like most Americans, you're probably torn between many expenses - groceries, car payments, student debt, mortgage payments - and credit card companies make it all too tempting to pay just the minimum.

Using this calculator can help you devise a plan to take control of any money you owe. You can include up to five credit cards, credit lines, or loans in your payoff analysis.

In the guide below, we cover different ways to get a handle on credit card debt using our debt payoff calculator. We'll touch upon how debt accumulates so quickly and how to avoid scams in the payoff process.


How can a debt payoff calculator help me?

According to Experian's State of Credit 2017 Report, the average credit card balance in the U.S. is $6,354. This was a 2.7% jump from 2016.

Before you start on any plan to get rid of your credit card debt, you need a solid understanding of your finances.

Using a debt payoff calculator can help you visualize the debt and interest rate on each credit card and how long it'll take you to pay off that debt.

The calculator works by applying your additional payments to the debts with the highest interest rate first. This tool also allows you to determine the quickest way to pay off your debts while remaining within a reasonable budget.

How can debt affect my credit rating?

On the surface, credit cards seem completely harmless. You can borrow money you currently don't have and get to pay it back at a later date. Many cards also come with perks like airline miles or cash back for groceries.

But underneath the surface is usually an interest rate of over 20% that kicks in the moment you carry over any balance on your credit card.

Carrying a balance on your card for a month or two won't send you into crippling debt, but maintaining that habit can lead to serious credit card debt.

If you're paying the minimum each month, you're really only paying the interest on your balance plus a small portion of your principal.

Continue that habit and you'll soon find yourself in a debt spiral where you're only paying interest on your credit card as you rack up more purchases.

What are fast ways to get out of credit card debt?

If you have tons of credit card debt, you should know that it won't disappear overnight.

You will have to tighten your budget and look for savings opportunities to make the necessary payments and get rid of credit card debt.

1. Increase Your Monthly Payments

You might think that paying 2-3% over your minimum will eventually get you out of debt but it won't. You'll need to increase your minimum payments significantly.

If you usually pay $100 per month, try upping it to $200.

Not sure where the extra money is going to come from?

As you evaluate your credit card debt, also take a look at where all your money is going. If you're spending tons on food or entertainment each month, you need to start reconsidering your costly habits to make up for higher credit card payments.

Using a debt payoff calculator can help you come up with a strategy that's tailored to your circumstances.

2. Transfer the Debt

If you think you can pay off your credit card debt in 12 to 18 months, consider opening up a balance transfer credit card.

We know, sounds counterintuitive.

Many balance transfer credit cards will allow you to transfer existing debt for an introductory 0% APR during a promotional period of 12 to 18 months. You won't pay any additional interest on the debt, meaning you can start to dig yourself out of it.

This is a good option for borrowers with good credit scores and the funds to pay off their credit card debt in the allotted time span.

To see if this is feasible, play around with the debt payoff calculator. Set your interest rate to zero and see how long it takes to eliminate your balance in the payoff schedule.

3. Borrow from Yourself

Before thinking about borrowing from family, friends, or the bank, try borrowing from yourself.

If you have substantial funds in your 401(k), you can borrow from that account to make enough payments to pay off your credit cards. You'll be allowed to take out 50% or $50,000, whichever is less, from your account.

401k Loan Basics

There are some things to know about borrowing from your 401(k) that might influence your decision:

  • You will still pay interest on the amount you borrow, but it all goes back to you.
  • The interest on these funds will be paid with after-tax dollars.
  • When you retire and use the funds, you'll pay tax on the interest again.
  • You will have only five years to repay your 401(k) plus the interest.
  • If you cannot repay yourself in five years, the amount withdrawn will be taxed if you're under 59 1/2 years old. You'll also pay an excise tax of 10% as a penalty.

What is a debt management program?

If you need a way to get out of credit card debt with lower payments, a debt management program might be a reasonable course of action.

Debt management programs help you consolidate your debt and guide you through credit counseling. The credit counseling helps you better understand credit and how to best stay out of debt.

If you qualify, the best thing about these programs is that they can reduce your total credit card payments up to 30-50%. These programs can be used by anyone regardless of credit score or debt amount.

What's the best way to avoid credit card scams?

Unfortunately, many people are all too willing to take advantage of those desperate to pay off their credit card debt. They typically advertise their services by saying they'll reduce your interest rates or payments in exchange for a flat fee.

Another tactic that has become popular is for robocalls to prompt you to give your personal information. If you ever get a call where a system is asking you to give your credit card number or social security number, hang up immediately.

You can find tips about avoiding credit card interest rate reduction scams on the Federal Trade Commission's website.

While it might be tempting to get someone else to help you pay off your debt, these scams never pay off for you.

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