How to pay off debt faster

If you’re juggling multiple debts, it’s possible you’re so busy trying to meet your minimum repayments that you don’t think about how you’re paying off your debt. This could leave you carrying around debt for longer.

So here are some debt repayment strategies to consider. 

1. Pay the minimum payment on your card

The minimum payment on a credit card is the lowest amount you’re asked to pay before the due date. If you bank with CommBank, it’s usually $25 or 2% of your closing balance and you’ll avoid late fees by paying this. You need to be aware that the minimum payment is a fraction of your whole balance - and if you only pay the minimum rather than your total owing, you’ll incur more interest. 

2. Think about using savings to clear debt

If you have extra money in savings, consider whether it’s worth using any of it to pay down debt. The interest you need to pay on your credit card debt is usually higher than how much you would earn on a savings account. So if you don’t have need it for anything else and you’ve got enough for a rainy day, consider using savings to clear debt.

3. Look at the interest rate, not the balance

When you pay off your debt in proportion to the balance owing, without considering the interest rate, you could find yourself carrying debt for longer. Interest on even a small debt can build very quickly, so if you have a few debts to pay off, consider paying the ones with the highest interest rates first after you have made all of your minimum payments.

4. Decide on a debt repayment strategy

Put a plan in place to pay off your debt faster by considering a debt repayment strategy. It makes the most mathematical sense to pay off your debts with the highest interest rates first. But some people feel motivated to keep going when they tackle their smallest debts first. Others find it easier to pay their debts at once, which they can do with a debt consolidation loan.