Guide to paying off multiple credit cards

Quick insights

• There are several options to help you get organized when trying to pay off multiple credit cards.
• If you’re dealing with persistent credit card debt across multiple accounts, you might consider consolidation methods like a balance transfer card or a negotiated settlement.
• One way to help with on-time payments to multiple cards is to set up autopay.

Strategies to pay off multiple credit cards

There is no one-size-fits-all strategy for paying off credit card debt. Each of the following strategies could work for you, as could a combination of two or more:

• Pay more than the minimum: The first step in eliminating credit card debt is to start paying more than the monthly minimum. You should always prioritize paying at least the minimum amount on every account to avoid late fees, but whenever possible you should pay more than that in order to start paying down your debt. Interest charges won’t rack up as quickly if you pay more than your minimum balance.
• Snowball method: The debt snowball method is a debt reduction strategy for paying off credit card accounts one at a time. After paying the minimum on each card, put your remaining resources toward paying off the card with the smallest balance. One major advantage of this strategy is the confidence boost of seeing increasingly larger debts disappear, one at a time, like a snowball rolling down a hill and getting larger as it goes.
• Avalanche method: The debt avalanche method is another debt reduction strategy for paying off credit card accounts one at a time. After paying the minimum on each card, put your remaining resources toward paying off the card with the highest interest rate. The major advantage of this strategy is that by saving on interest from the highest-APR cards, you can end up significantly reducing the total amount of money you have to pay back.
• Consolidate: If you have persistent credit card debt, you might want to consider a low introductory APR balance transfer credit card and consolidate your debt in one place, then work to pay off as much of the balance as possible before the introductory APR offer ends.
• Negotiate: Negotiation is always a possibility when dealing with credit card debt. Try to talk with your lender(s) about the possibility of a negotiated settlement.
• Autopay: You can set up credit card autopay for at least the minimum monthly payment to avoid late fees and a hit to your credit score.
• Debt management: Work with a debt management agency or use self-help tools to come up with strategies for managing your debt.
• Free online tools: Consider utilizing free online tools, like Chase Credit Journey.

Best strategy for your situation

After investigating the available options, determine which strategy or combination of strategies is the best fit for you.

Debt consolidation/balance transfer

Debt consolidation with a balance transfer credit card is one strategy that could help you pay down your debt. This allows you to transfer multiple balances from credit cards with high interest rates onto one card with a low introductory APR period.

The low APR introductory period could be helpful if you pay off your debt before the period ends, allowing you to save on interest. That said, it’s important to consider the balance transfer fees that are typically associated with such cards to ensure that you do not pay more in fees than you save with the introductory interest rate.

Debt consolidation loans are also an option. You can apply for a personal loan used for debt consolidation, or take out a loan against the value of your home or retirement savings. While these types of debt consolidation loans do not typically offer 0% APR, their interest rates are usually lower than your credit card. They also typically don’t charge balance transfer fees, and you can frequently receive a longer repayment period, with payments that can be split into a single set monthly amount.

Negotiation

One option that may be available to pay down your debt is negotiation, either directly with your lender or through a third-party agency. There is no guarantee your lender will agree to a negotiated settlement, and there can be both positive and negative impacts if they do. Negotiation usually involves a single large lump sum payment, the temporary waiving or lowering of interest and late fees and/or a forbearance or hardship agreement to temporarily offer relief while you deal with a recent financial setback, such as job loss.

Each option could have a negative impact on your credit score if your lender reports the negotiated settlement to credit agencies. There is also the possibility you might have to pay taxes on any forgiven portion of your debt. For instance, if you owe $10,000 and negotiate a settlement for $7,000, you could be taxed on the remaining $3,000 as if it were income.

Despite these potential drawbacks, the long-term benefit of a negotiated settlement is debt relief for less than the full amount you would otherwise have owed, which could make it a worthwhile option to consider depending on your situation.

Setting up autopay

Perhaps the easiest option for paying off multiple credit cards is setting up automatic payments. This usually involves a one-time setup on your lender’s website or app. You can choose to pay the minimum payment, the full account balance, or anything in between, and you can schedule this autopayment to be withdrawn at any point up to and including your due date.

Setting up autopayment has no real drawbacks, and it can be a lifesaver when trying to negotiate monthly payments to two or more accounts. At the very least, it will help you avoid any late payment fees.

Bottom line

Whether you’re struggling with long-term credit card debt or just looking for an easier way to keep track of monthly payments across multiple accounts, there are numerous tools and strategies available to make credit card payments simpler and beneficial to your credit score.