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How to Pay Off $10,000 Of Credit Card Debt
Updated On January 14, 2022
Editorial Note: This content is based solely on the author's opinions and is not provided, approved, endorsed or reviewed by any financial institution or partner.
You may be wondering how to pay off $10,000 of credit card debt. If you have credit card debt, it may be overwhelming and take years to pay off. The good news is that there are several strategies that you can use to pay off $10,000 of credit card debt.
Here’s what you need to know.
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Here are some helpful strategies to pay off $10,000 of credit card debt:
- Consolidate credit card debt
- Consider a balance transfer credit card
- Get a hardship credit card payment plan
- Negotiate a credit card debt settlement
- Pursue credit card debt repayment
Consolidate credit card debt
If you have $10,000 of credit card debt, one option to pay off credit debt is through debt consolidation. If you have good credit and stable income, you may be able to consolidate credit card debt with a credit card consolidation loan. When you consolidate credit card debt, you could qualify for a lower interest rate if you have good or excellent credit. You also may be able to pay off credit card debt faster, typically in one to seven years.
What is a credit card consolidation loan?
With a credit card consolidation loan, you can consolidate multiple credit cards with a high interest rate into a new, single credit card consolidation loan with a lower, fixed interest rate. A credit card consolidation loan is a type of personal loan that you can use to consolidate credit card debt.
With a fixed interest rate, this means that your interest will never change while you pay off credit card debt. This makes your credit card payments more predictable.
Credit card consolidation loans also provide credit card debt repayment flexibility. You could choose a shorter credit card repayment term to save more money on interest. However, your monthly payments may be higher. Conversely, you could choose a longer repayment period, which means you could have a lower monthly repayment. However, you may pay more in interest on your personal loan.
Compare the latest rates for a credit card consolidation loan.
Use a credit card payoff calculator
This credit card payoff calculator shows you how much money you can save when you consolidate credit card debt.
Let’s assume that you have one credit card with $6,000 of credit card debt with a 20% interest rate and $100 monthly payment. Let’s assume you have a second credit card with $4,000 of credit card with a 22% interest rate and a $100 monthly payment. If you consolidate your credit card balance of $10,000 and weighted average interest rate of 21% with a new personal loan at an interest rate of 7%, then your total savings would be $11,919.
Credit card consolidation: Advantages
There are several advantages to a credit card consolidation loan:
- Fixed interest rate: A credit card consolidation loan has a fixed interest rate, which means your interest rate will never change. This makes monthly payment for a personal loan more predictable. In contrast, credit cards have variable interest rates, which means your interest rate could change each month.
- Lower interest rate: The goal of credit card consolidation is to get a lower interest rate with a personal loan compared to a credit card.
- Pay off debt faster: With a lower interest rate, you may be able to pay off credit card debt faster.
- Fast approval: Personal loans can be funded as soon as the same business day or the next business day. With a relatively fast approval process, you may be able to start saving money on your credit card debt sooner.
- Improved credit score: A personal loan is considered an installment loan, and compared with credit card debt, may help you increase your credit score. Make sure to make regular, on-time payments each month and you could increase your credit score also by building your payment history.
Compare the latest rates and lenders for personal loans.
Credit card consolidation: Disadvantages
There are several disadvantages to a credit card consolidation loan:
- Requires better credit: Personal loans generally are more consumers with good to excellent credit. If you have bad credit, it can be harder to get a personal loan. However, you could apply for a personal loan with a qualified cosigner to help get approved and possibly get a lower interest rate.
- Fees: Some, but not all, personal loans may have fees. Check with your lender to understand if there are any fees and how and when they are applied.
- Pay off time: While you may want to pay off credit card faster, make sure your repayment term matches your financial reality. Typically, the personal loans are paid off within seven years, but you can check with your lender for flexible repayment options.
Consider a balance transfer credit card
Another option to pay off $10,000 of credit card debt is to consider a balance transfer credit card. A balance transfer card is a type of credit card where you can transfer you current credit card debt to this card and get the benefit of 0% APR for at least 12 months or more.
Compare balance transfer credit cards to find the best credit card for you.
A 0% APR credit card is a type of credit card that does not charge you any interest on new purchases or your current credit card balance for a certain period of time. You can also transfer a credit card balance for a fee from another credit card to your new 0% APR credit card. You can compare 0% APR credit cards to find the best 0% APR credit card for you.
Balance transfer credit card: Advantages
There are several advantages to a balance transfer credit card:
- 0% APR: The key advantage of a balance transfer credit card is 0% APR. This means that during the 0% APR period, you won’t have to make any interest payments on your credit card debt balance. Some balance transfer credit cards have 0% APR on existing credit card balances, new purchases or both.
- Rewards: Some balance transfer credit cards may offer rewards such as a cash signup bonus, for example, or ongoing cash back.
- Improve credit score: You can use a balance transfer credit card to build credit and boost your credit score. Once your 0% APR ends, make sure to make regular, on-time payments.
Balance transfer credit card: Disadvantages
There are several disadvantages to a balance transfer credit card:
- Fees: Balance transfer credit cards may charge a 3-5% fee of your credit card balance to make a balance transfer.
- Interest rate: With a balance transfer credit card, the goal is to pay off your entire credit card balance before the 0% APR period ends. Otherwise, regular high interest rates will accrue on your credit card balance.
- More credit card debt: If you think you may incur more credit card debt, consider a 0% APR credit card.
Get a hardship credit card payment plan
Another option to pay off $10,000 of credit card debt is to contact your credit card company and ask about a hardship credit card payment plan.
Your credit card company may be able to offer you a flexible hardship credit card payment plan so that you make regular credit card payments and pay off your credit card debt.
Importantly, don’t wait until the last minute to contact your credit card company. If you think you will miss a credit card payment, contact your credit card company in advance to discuss credit card repayment options.
Hardship credit card payment plan: Advantages
There are several advantages to a hardship credit card payment plan:
- Fixed repayment: Like a personal loan, a hardship credit card payment plan typically offers a fixed interest rate, which makes credit card payments more predictable.
- Advance notice: Remember to contact your credit card company in advance so you can communicate you might not be able to make your next credit card payment. This will help you save fees and maintain your credit card payment history.
- Better terms: You may be able to negotiate better terms with your credit card company, such as a lower interest rate.
Hardship credit card payment plan: Disadvantages
There are several disadvantages to a hardship credit card payment plan:
- Closed account: It’s possible that your credit card company could close your credit card account during your hardship credit card payment plan.
- Credit score impact: Failure to pay your credit card payments could adversely impact your credit score.
- No consolidation: Unlike a credit card consolidation loan, you can’t get a single hardship credit card payment plan. Instead, you will need to contact each credit card company separately.
Negotiate a credit card debt settlement
To pay off $10,000 of credit card debt, you could negotiate a credit card debt settlement with your credit card company. This is similar to a hardship credit card plan, but there are some important differences. A credit card debt settlement is an agreement between you and your credit card company whereby you pay a lump sum payment to pay off credit card. In a credit card debt settlement, the amount of cash that you agree to pay is often less than the amount of credit card debt that you owe.
Check out this lump-sum payment calculator to learn how much money you can save with a credit card debt settlement.
Credit card debt settlement: Advantages
There are several advantages to a credit card debt settlement:
- Save money: With a credit card debt settlement, you can save money if you settle for a lower amount than the amount of credit card debt that you owe.
- Direct settlement: You have the ability to settle directly with your credit card company without involving any third parties, which could charge fees to negotiate a credit card debt settlement.
- Protect credit score: A credit card debt settlement could prevent further damage to your credit score.
Credit card debt settlement: Disadvantages
There are several disadvantages to a credit card debt settlement:
- Fees: If you involve a third party to negotiate a credit card debt settlement on your behalf, then that third party could charge a significant fee for their services.
- Damage to credit: If you stop making credit card debt payment or make late credit card debt payments, your credit score may decline.
- Unfair terms: You may think the terms of the credit card debt settlement are unfair. In this case, you may want to explore other options such as a personal loan or balance transfer credit card.
Pursue credit card debt repayment
A final way to pay off $10,000 of credit card debt is to make regular credit card payments each month. This could take a longer period and could be more expensive than other options to pay off credit card debt. A budget could help you manage your monthly income and expenses so that you can pay the maximum amount each month to pay off credit card debt. Understand your monthly income and subtract your living expenses and any other debt payment such as a home loan or student loans. The remaining amount can be applied toward paying off credit card debt.
Credit card debt repayment: Advantages
There are several advantages to credit card debt repayment:
- Simplicity: Traditional credit card debt repayment can be the simplest approach without having to borrow a loan or taking out a credit card.
- Discipline: Paying off credit card debt each month teaches financial discipline.
- Improve credit score: Making regular, monthly and on-time credit card payments over the long term can improve your credit score.
Credit card debt repayment: Disadvantages
There are several disadvantages to credit card debt repayment:
- Costly: If you owe $10,000 of credit card debt with a high interest rate, it may become very expensive if you only pay a small amount each month and carry a credit card balance.
- Time: It could take more time to pay off credit card debt, which could make credit card debt repayment more expensive and time-consuming.
- Credit score: If you don’t make regular credit card payments, your credit score could decline.
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