How to Pay Off Credit Card Debt FAST (3 Proven Ways)

In today's video, I'm going over how to consolidate credit card debt with three proven ways, because if you guys do have credit card debt, I want you to get out. Because even if you've got just a little bit of credit card debt, that still sucks because you're going to be paying interest on it, but the real big problem is when you have a ton of credit card debt. And that's because you'll be spending a ton of money on interest, and on top of that, you're going to be jacking up your credit utilization score as well. So in this video, I'm going to teach you how to consolidate credit card debt, but I'm also going to teach you why you should do it in the first place. And if you just found this channel, I'm Jason with Honest Finance, and I make a lot of videos on different topics that'll give your life and your finances more value. So feel free to subscribe if you guys want to, or just give this video a like. But now let's start talking about debt consolidation. Now before I start talking about how to consolidate credit card debt, I first need to go over why you should do it in the first place. Because there's mainly two reasons why you need to get out of credit card debt, and the first reason is called your credit utilization score. This controls 30% of your credit score, which is 255 points, and it all has to do with how much you're spending on your credit cards versus how much their limits are. So basically, if you've got three credit cards with a total spending limit of $20,000, but you spend $8,000 during the month, then your credit utilization score is going to be 40%, which is not good. Now I'll explain why it's a bad thing in just a second, but in order to do the math, all you do is take $8,000, divide it by $20,000, and then that gives you your utilization score. You want your utilization score to be below 15% because that's going to give you the biggest boost to your credit score. And if you can get the score between 1% and 5%, then that's going to be the absolute best utilization score that you can have towards your credit score. And obviously, if you have a ton of credit card debt, then your credit score is always going to suffer because of the bad utilization score. And if you do want to know more about how your credit utilization score works, then you can watch this video up here where I'll teach you quite a bit more about it. So if you want to improve your credit score, then you're going to have to get rid of your credit card debt. And maybe one of the only ways you can do that is through consolidation. Now, the second reason why you should consolidate your credit card debt is simply because of how much the interest is actually costing you. I mean, let's say that you owe $10,000 on all your credit cards, and the average interest rate is 22%. Well, with those numbers, you're going to be wasting about $180 in interest per month just based on a $10,000 balance. But if you consolidated all of that debt into just one loan that was 8%, then you're only going to be paying about $65 a month in interest, which is so much better. Now, those are the reasons why you should definitely get out of credit card debt. But now I want to talk about how to get out of credit card debt. So let's get started on that. And if you've made it this far into the video, could you please just comment down below and say, I'm still here? That way I still know who's watching the video. Thanks. The first way to do it is just by taking out a debt consolidation loan and Now, I highly advise that you only do this if you get a good rate and terms, and then you make sure that you pay off your credit cards and you never go back into the credit card debt again. Because if you just keep your same spending habits, then you're going to rack up another credit card balance, and you'll be paying off the loan at the same time. So just take my advice and stop all of your bad spending habits and get out of debt for good. Now, as far as lenders go, you can check with your local credit unions, or you can check online for some of the best rates. And just stick with reputable lenders, because there are a lot of really bad personal loans out there, and I don't want you guys to get into any of those. I especially don't want you guys paying any origination fees, because those can actually be up to 5% of the total of the loan's value that you have to pay up front right when you get the loan. So let's just say that you take out a personal loan for $10,000 with a 5% origination fee. Well, you're going to have to pay an instant 500 bucks, and then when you actually take out the loan, it's only going to be for 9,500 bucks, all because of the stupid origination fee. A lot of the big lenders even charge origination fees, like Prosper and Lending Club, so I would definitely recommend going with someone that doesn't charge an origination fee, because it's just a waste of money that you don't have to pay. I'd recommend checking out Lightstream Loans for Debt Consolidation, because they've got some of the best rates in the industry, and they don't charge any fees. They don't have any dirty origination fees, and they don't have prepayment penalties as well. They'll also beat any competitor's rate for the same loan by a tenth of a point, so you'll always know that Lightstream's going to have the best rates from anyone. Now, I'll leave an affiliate link in the description, which means I may be compensated if you click through it, but just keep in mind that I want you guys to check out Lightstream Loans, because I'm only going to recommend companies that I think are the best value for you. Now, the next way you can consolidate credit card debt is by actually finding a new credit card with a 0% balance transfer offering, because that way you can move all of your debt into the new card and pay 0% interest. They'll usually give you about 12 months with 0% interest, so it's a really good way to just quickly tackle your credit card debt, but there are some cons to it as well. For instance, you'll most likely have to pay an upfront 3% balance transfer fee, which is just a total waste of money. And then on top of that, your credit utilization score is still going to suck because you're just moving the debt onto another card. So honestly, it's not always the best option to move your debt from one credit card onto another credit card, but it is a solution if they offer the 0% transfer. And that's because if you've got a little bit of credit card debt at 0% interest for 12 months, then you probably have enough time to tackle the debt and then not worry about it ever again. Now, last on my list of debt consolidation is called cash out refinancing. What this means is that you can either refinance your car or your house, and you can actually take some of the equity that you've built up in them, and then you can use that as a cash out refinance so that you can pay off your credit cards. So if you refinanced your car for $20,000, but it was actually worth $30,000, then you could actually take some cash out on the loan and make it a little bit bigger, like $25,000, and then you can use that extra money to pay off your credit cards. This is a great way to get rid of credit card debt because the interest rate's probably going to be a lot cheaper than it is on a personal loan, but I would still warn that you're taking money out against your equity, which is not a good thing. Because if you take out money from your built up equity, then you're just going to owe more on that particular item just to pay off your credit cards. And on top of that, you've still got to go through the hassle of refinancing. And trust me, if it's a home, just the closing costs alone are not going to be worth doing that option. So I would only look into this option if you were going to refinance anyway, and then you can pay off your credit cards at the same time. Now, these are the ways that I'd recommend you guys can use to get out of credit card debt. There are definitely more ways that you guys can do it, but these are the three ways that I would recommend trying first because they work. Credit card debt totally sucks, but you can get out of the hole if you consolidate responsibly. Just pay off the debt and make sure that you don't get into the same situation a second time. Once again, I'm Jason with Honest Finance, and I make a lot of videos on different topics that'll give your life and your finances more value. So feel free to subscribe if you want to, or you can check out some more of my videos here. That's all.