# How long will it take to pay off your debt?

If you have experience with credit card debt, you may know that it can get frustrating quickly. That's because in most cases, minimum payments are calculated as 1% of your balance plus interest. So, the vast majority of your minimum payment might be absorbed by interest — with a very small percentage of your payment going toward paying your debt off.

This can make it feel like you may never get out of debt, especially considering that interest rates on credit cards are variable, so they can change over time. So, how can you determine the time it will take to pay off your debt? Well, it depends on a few factors, but in some cases, the answer can be surprising.

## How long will it take to pay off your debt?

When it comes to loans with fixed payments, like most auto loans and mortgages, you are given a timeline for how long it will take to pay off your debt on the day you take out the loan. That said, you can speed up the repayment process by making extra payments.

However, it can be far more difficult to determine how long it will take to pay off credit card debt.

"Interest rates on credit cards average 18 to 20%, which makes it hard to have an impact on bringing the balance down," says Krissten Petersmarck, investment advisor representative at Bridgeriver Advisors.

So, how long will it take to pay off credit card debt if you're making only minimum payments? Here are a few potential scenarios to illustrate, assuming minimum payments are calculated as 1% of the balance plus interest:

• \$5,000 with a 20% APR: Your minimum payment would be \$133.33 per month and it would take 277 months to pay off \$5,000 at 20% interest. Over that time, you would pay \$7,723.49 in interest.
• \$10,000 with a 20% APR: Your minimum payment would be \$266.67 per month and it would take 346 months to pay off \$10,000 at 20% interest. You would pay \$16,056.59 in interest over that time.
• \$25,000 at 20%: Your minimum payment would be \$666.67 per month and it would take 437 months to pay off \$25,000 at 20% interest. You would pay \$41,056.85 in interest over the life of the debt.

## Tips for paying off credit card debt

The good news is that "there are ways to address credit card debt," says Petersmarck. "The first step is to speak with a financial professional who specializes in debt."

Here are a few options to consider:

### Take advantage of debt relief solutions

Debt relief companies can help get you out of debt, and there are two common forms of debt relief solutions. The first is debt consolidation, which typically involves the debt professionals negotiating new interest rates and payment terms with your lenders. You then send one monthly payment to the debt consolidation company and they pay the lenders as agreed. This process can save you thousands of dollars in interest — and years of payments — if you have large credit card balances.

Another option to consider is debt settlement. With these types of programs, debt relief experts negotiate the total amount of money you owe to your creditors. This can lead to significant savings but usually has a detrimental effect on consumer credit scores.

### Use the debt snowball or the debt avalanche payment method

The debt snowball or debt avalanche payment methods could save you thousands of dollars in interest payments and get you out of debt far faster than making just the minimum payments. Here's how these strategies work:

• Debt snowball: Make minimum payments to all of your creditors except the one you owe the least money to. Divert all of your extra funds to the card with the smallest debt to pay it off quickly. Once that's paid off, you then address your next smallest debt. Paying off debts quickly can offer a psychological pick-me-up that keeps you on track to meet your debt relief goals.
• Debt avalanche: The debt avalanche method works like the debt snowball method. The difference is that instead of focusing on your smallest debt, you'll focus on the debt with the highest interest rate. This helps by prioritizing the debts that cost you the most money over time, reducing the overall amount of money and time you spend paying your debt back.

### Apply for a debt consolidation loan

Debt consolidation loans are personal loans designed to be used specifically to pay off high-interest debt. These loans typically come with lower interest rates than credit cards — helping you get out of debt faster than you would by making minimum payments across multiple credit card accounts.

## The bottom line

Debt can take quite some time to pay off, especially when it's high-interest credit card debt. But you don't have to feel overwhelmed by your debts forever. Consider taking advantage of one of the options above to pay your debts off as fast as possible.

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