Is It Better To Pay Off Credit Cards Slowly or All At Once?

Written By Mary Beth Eastman
Last updated January 29, 2021

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July 9, 2019

Simple. Thrifty. Living.

When you swipe your credit card at a store, or type in the numbers to pay an online bill, it’s easy to forget that you haven’t really paid for anything yet. The $100 that you spent on groceries? Now you owe it to the credit card company – plus interest, if you can’t pay the balance right away.

But what’s the best way to pay off that credit card balance? All at once, or by chipping away at it month by month? The answer is a little murkier than you might realize.

Wiping out your credit card debt at one time is ideal, if you can afford to do it. This strategy eliminates your balances so you don’t have to pay interest each month. Because carrying debt is such a source of stress, paying off your balances at once is also psychologically beneficial.

The biggest downside to this strategy is that it’s just not feasible for most people who have debt. If taking out an interest-bearing loan is the only way for you to pay off your credit cards at once, or if you have other debts with higher interest rates than your credit cards, this option might not be your best choice.

Some people mistakenly believe that paying off credit card debt is bad for their credit score. In fact, as long as you don’t take out another loan to make it happen, taking your credit card debt to zero should boost your score by improving your credit utilization ratio. Just don’t cancel the paid card. Closing accounts can ding your score.

For most people, paying off credit cards slowly is the only viable option, and that’s okay! This method can really work, if you know how to maximize your payments to get out of debt as quickly as possible.

There are two approaches to consider. The first is often called the snowball method. List your debt by smallest balance to largest, then make minimum payments on all the cards except the one with the lowest balance. Put any extra money toward this balance until it’s paid off, then start putting extra money toward the next highest balance, and so on. This strategy is great for people who feel discouraged about their debt. Paying off a debt quickly gives them momentum to keep going.

The other option is the avalanche approach. This is the best strategy for minimizing your interest payments. Pay the minimum balance each month on all credit cards except the one with the highest interest rate. Put as much as you can afford toward that balance each month. When it’s paid off, focus on the balance that has the next-highest interest rate.

About the Author

Mary Beth Eastman

Mary Beth Eastman serves as the content manager for Simple. Thrifty. Living, where she is dedicated to helping readers use money and credit wisely. Mary Beth believes that access to the right financial information paired with a growth mindset are essential tools for getting out of debt and building wealth. Mary Beth has a degree in Journalism from Bowling Green State University and has focused her 20-year journalism career on putting readers front and center, carefully considering their concerns and presenting information that will help them in their everyday lives. She has won numerous statewide journalism awards. Her writing on personal finance as been featured on numerous websites in addition to Simple. Thrifty. Living, including Huffington Post and Lexington Law blog. Mary Beth resides in Pittsburgh, Pa., with her family and two rescue dogs.

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