What Is The Best Way To Pay Off Debt?

Information verified correct on October 25th, 2016

The best way to pay off debt is slowly but surely. If you are struggling with debt, then, by definition, you will not be in a position to make any quick or large inroads into your debt, so you can only start off small.

The key is not to be disillusioned by this slow progress, then lose the will to see it through. Many people end up spending more money on unnecessary items when they get a little downhearted, so becoming disillusioned is a state of mind best avoided if you sincerely want to pay off your debts.

Tips for the best way to pay off debt:

To keep enthusiastic, you might want to apply for a debt consolidation loan. You need to make a plan, write it down and stick to it. The logic is that the best way to pay off debt is to attack your larger, high interest debts first. This is certainly the most sensible approach, because these debts will be leeching the most from your finances.

Some people, however, have found that focusing on the larger debt actually does not work for them. These people have found that the ideal way to pay off debt is to hit the smaller ones first. This is for psychological reasons. A smaller debt can be paid off more quickly, and can then be crossed off the list. It gives the appearance of real progress, rather than chipping away slowly at the large debt and knowing it could be many months before the debt can finally be crossed off.

Then again, perhaps the method to pay off debt is to make a balance transfer, consolidating all your debts into one low interest loan. Reducing a credit card debt from 15% to 0% is entirely possible, provided your credit history will allow it. At 0%, you will be allowed anything from six to sixteen months to pay your dues before your rate ramps back up again. Alternatively, you can opt for a rate of 5% to 9% which is set for the life of the loan. This large, lower interest rate loan can then be tackled without the sense of panic that accompanies a higher rate of interest.

Whichever approach you decide is best for you, there is one factor that runs through all these options. You must focus on your goal and maintain your commitment. Your sights must always be on the end result of restoring your finances to perfect health. Ultimately, the best way to pay off debt is to remember how horrifying the alternative might be.

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Credit Cards Comparison

Rates last updated October 25th, 2016
Purchase rate (p.a.) Balance transfer rate (p.a.) Annual fee
Virgin Australia Velocity Flyer Card - Balance Transfer Offer
Enjoy a 0% p.a. balance transfer offer for 18 months and also earn 2 bonus Velocity Points in the first 3 months on everyday spend.
20.74% p.a. 0% p.a. for 18 months $64 p.a. annual fee for the first year ($129 p.a. thereafter) Go to site More info
ME Bank frank Credit Card
Enjoy a low and consistent interest rate on purchases and cash advances, combined with no annual fee.
11.99% p.a. $0 p.a. Go to site More info
HSBC Platinum Credit Card
Receive a full annual fee refund and save $149 if you meet the $6,000 spend requirement. Enjoy a balance transfer offer and platinum card benefits such as complimentary insurances and concierge services.
19.99% p.a. 0% p.a. for 15 months $149 p.a. Go to site More info
NAB Low Rate Credit Card
The NAB Low Rate Card offers 0% p.a. on purchases and balance transfers for 15 months. This card also comes with a low annual fee.
0% p.a. for 15 months (reverts to 13.99% p.a.) 0% p.a. for 15 months with a one off 3% balance transfer fee $59 p.a. Go to site More info

* The credit card offers compared on this page are chosen from a range of credit cards CreditCardFinder.com.au has access to track details from and is not representative of all the products available in the market. Products are displayed in no particular order or ranking. The use of terms 'Best' and 'Top' are not product ratings and are subject to our disclaimer. You should consider seeking independent financial advice and consider your own personal financial circumstances when comparing cards.

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