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Credit card debt can go from zero to thousands with one quick swipe. Or it can build slowly like rising water — a nice dinner here, some retail therapy there. Before you know it, your balance is uncomfortably high. You’re not alone. Almost half of American households carry credit card debt. Of those consumers, the average balance is $5,315.

If you’ve vowed to pay off your credit card balance, you’re making a smart financial move. You’ll save money on interest, boost your credit history, and position yourself to achieve other financial goals. Here, we reveal the top tips and strategies for getting it done, from the Snowball strategy to hardship plans to the boring-but-effective debt-focused budget.

What Is a Realistic Payoff Schedule?

If you’ve been carrying a balance on one or more cards, it may take longer than you’d like to pay off the debt. Determine how long you need to become debt-free while still covering your monthly bills comfortably. A longer payoff term will allow you to continue to save and invest while paying down debt. But a shorter payoff term can save you a considerable amount in interest.

If there’s no scenario where you can cover your living expenses and pay off your credit card debt in five years, these strategies may not be enough. In that case, it may be time to consider applying for credit card debt forgiveness.

7 Credit Card Payoff Strategies and Tips

There are numerous ways to tackle debt and pay off credit cards. The approaches below will work best when you mix and match several to create your own custom debt-payoff plan.

1. Create a Debt-Focused Budget

Achieving financial goals always starts with a budget. This exercise is designed to help you discover extra cash you can put toward your credit card bill.

First, make a list of your monthly bills. Along with your rent payment, phone, gas, and other required living expenses, include your credit card payment. You can leave the amount blank for now. This is your “Needs” column.

Now look at your “Wants.” These are things that you can survive without — restaurants, new clothes, gym membership — but that often make life better. Which items can you do without temporarily so you can put their cost toward your credit card bill?

It’s OK if your budget isn’t the same from month to month — flexibility is good. While you’re at it, look ahead for unavoidable big purchases (that upcoming destination wedding) and leave room for unexpected expenses. Your credit card payment may be lower some months to accommodate these other costs. Just always pay at least the minimum payment.

Your new budget should prioritize your credit card payment on par with other bills, and above nonessential treats. One way to make budgeting easier on yourself is to download an app like SoFi Relay, which pulls all of your financial information into one place.

2. Zero Interest Credit Card

The frustrating thing about credit cards is how interest can take up more and more of your balance. Zero-interest credit cards, also known as 0% APR cards, allow card holders to make payments with no interest on transfers and purchases for a set period of time. The promotional period on a new credit card can last as long as 18 billing cycles, long enough to make a large dent in the card’s principal balance.

Consolidating your credit card debt on one zero-interest card serves to simplify your monthly bills while also saving you money on interest payments. The key here, of course, is to avoid racking up even more credit card debt.

One drawback to these cards is that you often need a FICO Score of 690 or above to qualify. And once the promo period expires, the interest rate can climb to 27% or higher. In an ideal world, you’ll want to achieve your payoff goal before the rate rises.

A credit card interest calculator can give you an idea of how much your current interest rate affects your total balance.

3. The Snowball, The Avalanche, and The Snowflake

The Snowball and Avalanche debt repayment strategies take slightly different approaches to paying down debt. Both involve maintaining the minimum payment on all but one card.

The Debt Snowball method focuses on the debt with the lowest balance first, regardless of interest rate, putting extra toward that payment each month until it’s paid off.

Then, that entire monthly payment is added to the next payment — on top of the minimum you were already paying. Rinse and repeat with the next card. It’s easy to see how this method can quickly get the snowball rolling.

The Debt Avalanche is based on the same philosophy but targets the highest-interest payment first. Getting out from under the highest debt can save a lot of money in the long run. Just like the Snowball method, applying that entire payment to the next-highest-interest debt can lead to quick results.

The third snow-related strategy, the Debt Snowflake, emphasizes putting every extra scrap of cash toward debt repayment. If you have extra money to throw at your debt, even $20, that can still make a difference in your overall amount owed.

4. Make More Money

Sure, increasing your income is easier said than done. But if you have the time to spare, it can make paying down debt a whole lot easier. Here are the top ways that people can bring in more cash:

•   Start a side hustle (or monetize and existing hobby)

•   Get a part-time job (on top of your current job). Two shifts a week can help you bring in another $500 to $1,000 per month.

•   Sell your stuff. It’s easier than ever to resell clothes, books, old electronics, and jewelry.

•   Negotiate a raise. Labor shortages have given workers extra leverage to ask for more.

5. Negotiate with Your Credit Card Company

If your large credit card balance is the result of unemployment, medical bills (yours or a loved one’s), or another financial setback, inform your credit card company. You may be able to negotiate a lower interest rate, lower fees and penalties, or a fixed payment schedule.

Hardship plans have no direct effect on your credit rating. However the credit card company may send a note to the credit bureaus informing them that you’re participating in the program. They may also close or suspend your credit card while you’re paying off the balance, which can ding your credit score.

6. Change Your Spending Habits

Changing how you spend your money is key to paying down debt — and to avoid racking up more in the future. You can approach this in two ways: as a temporary measure while you pay off your cards, or a permanent downsizing of your lifestyle.

The advantage of the temporary approach is that people are generally more willing to give things up when it’s for a limited time. For instance, can you suspend your gym membership during the warmer months when you can work out outdoors? Perhaps you can challenge yourself to cook at home for 30 days to save on restaurants. Imagine going without paid streaming services for six months.

String enough of those small sacrifices together to cover a year or two, and see how quickly your credit card payments grow. And your payoff term shrinks!

Downsizing your lifestyle has its own appeal, even for people who aren’t paying down debt. Living below your means is key to accumulating wealth. How exactly you accomplish that isn’t important. For instance, you can frequent cheaper restaurants, reduce the number of times you go out each month, or merely avoid ordering alcohol and dessert. The bottom line is to save money, avoid debt, and enjoy the financial freedom that results.

7. Personal Loan

Similar to a zero-interest credit card, a personal loan is a form of debt consolidation. Personal loans tend to have lower interest rates than credit cards, saving you money. And if you’re carrying a balance on multiple credit cards, a personal loan allows you to simplify your debt with one fixed monthly payment.

Personal loans are a great option for people with good to excellent credit. That’s because your interest rate is determined largely by your credit score and history. You can typically borrow between $1,000 and $100,000, and use the money for just about anything.

The Takeaway

Credit card debt can sneak up on you. If you’re carrying a balance on one or more cards, there are numerous ways to approach paying down your debt. Start with a new budget that prioritizes your credit card payment along with your other monthly bills, and trim your spending accordingly. Then combine a broad payoff strategy (the Snowball, the Avalanche) with other tips and tactics (zero-interest credit cards) to minimize your interest payments and shorten your payoff term. And remember: You’re not alone, and you can do this!

If you’re thinking about consolidating credit card or other debt, a SoFi Personal Loan is a strong option to consider. SoFi’s Personal Loan was named NerdWallet’s 2022 winner for Best Personal Loan for Good and Excellent Credit, and Best Online Personal Loan overall.

Compared with high-interest credit cards, a SoFi Personal Loan is simply better debt.

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SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.

Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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One of the best things to do for your anxiety and your credit score is to pay off credit card debt. People who commit to a payoff strategy (like Snowball or Avalanche) will make quick progress while building their credit history. People in financial crisis may benefit from negotiating with creditors to freeze their account or lower their interest rate, though their credit rating may suffer. Simplifying payments with a debt consolidation loan is also an increasingly popular tactic.

We’ve compiled several strategies that can help you consolidate credit card debt without hurting your credit score. Find the one that best suits your circumstances.

What Not to Do: Ignoring Credit Card Debt

When it comes to credit card debt, the consequences of avoidance and procrastination are steep. If you miss payments, your creditor will likely reach out and notify you of your delinquency.

Miss enough payments and your account might be closed. Your credit card issuer will report your missed payments to credit reporting agencies, which can negatively impact your score. Remain delinquent long enough and your account might be sent to collections (either in-house or third-party). Needless to say, this is not good for your credit score and history.

What You Should Consider: Paying off Credit Card Debt Using a Planned Approach

We mentioned anxiety earlier. Well, trying to pay down a large credit card balance without a debt payoff strategy is a recipe for more anxiety. Sure, making a plan may require taking a close look at your bad habits, which is stressful. But trust us when we say, a good plan is the best way to set yourself up for smooth sailing. Two common approaches to getting out of credit card debt without ruining your credit rating are the Snowball and the Avalanche.

With the Snowball method, you work to pay off your debts from smallest balance to largest, regardless of the interest rate. As you pay off each card, you roll that monthly payment over to the next smallest balance. Meanwhile, it’s important to make minimum payments on your other cards. (Take a deep dive into the Snowball method here.)

The Avalanche method advises focusing on the debt with the highest interest rate. Let’s say you have two credit cards, one with an interest rate of 8% and the other of 15%. Start with the balance accruing 15% interest. When you pay off that card, turn your attention to the debt with the next highest interest rate. And of course, be mindful that you’re making credit card minimum payments on all your debts.

Both strategies serve to build a positive credit history as you get out of debt. Not only will they not ruin your credit, you may even end up with a higher FICO Score.

Negotiating and Settling Credit Card Debt

If you have been struggling to make payments on your credit cards, there is a good chance your credit score has dropped. Before the debt is sent to collections, you may be able to negotiate with the credit card company.

Like any business, the primary goal of a credit card company is to make a profit. When it becomes apparent that a cardholder is unable to pay their bills, companies are sometimes willing to find an arrangement that will enable the customer to make payments based on their situation. Three possible options are a debt settlement, a hardship repayment plan, and temporary forbearance.

In a debt settlement, the credit card company agrees to reduce the balance owed in exchange for a lump sum payment. If your balance is $15,000, the company may agree to a payment of $8,000 and “forgive” the rest. There are two disadvantages with this scenario: The card holder has to come up with $8,000, and their credit score can be negatively affected.

With hardship repayment, the company freezes the current debt and works with you to create a repayment plan based on your current income and circumstances. The company may lower your interest rate and waive fees during the repayment period. You may qualify for a hardship program if your debt is the result of unemployment, serious illness, family emergency, or a natural disaster. In hardship cases, your credit rating is usually not affected, though your participation in the program may be reported to the credit bureaus.

Finally, in a temporary forbearance, the credit card company freezes any combination of the current debt and interest rate, and eliminates late fees and penalties for an agreed upon period of time. This is usually reserved for card holders who are currently in financial crisis. One drawback is that your debt isn’t resolved but merely put on hold while you sort out your finances.

You should know that most forgiven debt is considered income by the IRS. So if you had $15,000 in debt but settled for $8,000, the IRS may consider that extra $7,000 to be taxable income.

Recommended: What Is Credit Card Debt Forgiveness?

What Is the Statute of Limitations on Credit Card Debt?

The statute of limitations governs how long a creditor can sue you for nonpayment of a debt. The statute of limitations on credit card debt varies from state to state, but is typically between three and 10 years.

You can find out yours by requesting a debt verification or validation letter from your creditor. The statute of limitations clock starts from the last moment the debt was active. When you contact your creditor, don’t agree to any payment plan until you confirm the statute of limitations on your debt. Otherwise, you may inadvertently restart the clock.

Even if your debt is past the statute of limitations, it may still be within the credit reporting time limit. This is the amount of time delinquent account information can appear on your credit report. In most cases, the credit reporting time limit for negative information is seven years.

If your debt is sold to a third-party collections agency, try to negotiate a payoff amount to close the collections attempt. Debt collectors buy debt from the company you owed for a fraction of the original unpaid balance. Because of this, collectors might take less than what you owe if you have strong negotiation skills.

Say Goodbye to Credit Card Debt with a Personal Loan

Personal loans are a type of unsecured loan. There are a number of uses of personal loans, but paying off credit card debt is one of the most common. Loan amounts vary by lender from $1,000 to $100,000, and are paid out as soon as the loan is approved. The borrower then pays back the loan — with interest — in monthly installments.

Many unsecured personal loans come with a fixed interest rate. An applicant’s interest rate is determined by several factors, including credit score, income, and debt-to-income ratio, among other factors. Typically, the higher an applicant’s credit score, the better their interest rate will be, as the lender may view them as a less risky borrower.

When using a personal loan for credit card debt, the loan proceeds are used to pay off the cards’ outstanding balances, consolidating the debts into one loan. This is why it’s also sometimes referred to as a debt consolidation loan. Ideally, the new loan will have a much lower interest rate than the credit cards. By consolidating credit card debt into a personal loan, a borrower’s monthly payments can be more manageable and cost considerably less in interest.

In the long run, the borrower’s credit history and rating is strengthened by paying off the personal loan.

The Takeaway

To pay down a large credit card balance, it’s essential to have a strategy. Two of the most popular are the Snowball and the Avalanche. The Snowball entails working to pay off the lowest balance card first, while making minimum payments on the others. The Avalanche advises paying off the highest-interest card first, while making minimum payments on the others. Neither method will hurt your credit rating, and may help it. It’s also fairly common to take out a debt consolidation loan to pay off cards.

If you are considering consolidating your credit card with a personal loan, check out SoFi. SoFi Personal Loans offer low fixed rates and no fees required. And if you lose your job, SoFi will temporarily pause your payments and even provide career coaching. SoFi’s Personal Loan was even named NerdWallet’s 2022 winner for Best Online Personal Loan.

If you’re ready to get your credit card debt under control, see how a SoFi personal loan can help.

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SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.

Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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When debt accumulates on a high-interest card, interest starts to add up as well, making it harder to pay off the total debt — which, in turn, can become a credit card debt spiral. If you end up with mounting debt on a high-interest credit card, a balance transfer is one possible way to get out from under the interest payments.

A balance transfer credit card allows you to transfer your existing credit card debt to a card that temporarily offers a lower interest rate, or even no interest. This can provide an opportunity to start paying down your debt and get out of the red zone. But before you make a balance transfer, it’s important that you fully understand what a balance transfer credit card is and have carefully read the fine print.

How Balance Transfers Work


The basics of balance transfer credit cards are fairly straightforward: First, you must open a new lower-interest or no-interest credit card. Then, you’ll transfer your credit card balance from the high-interest card to the new card. Once the transfer goes through, you’ll start paying down the balance on your new card.

Generally, when selecting to do a balance transfer to a new credit card, consumers will apply for a card that offers a lower interest rate than they currently have, or a card with an introductory 0% annual percentage rate (APR). Generally, you need a solid credit history to qualify for a balance transfer credit card.

This introductory period on a balance transfer credit card can last anywhere from six to 21 months, with the exact length varying by lender. By opening a new card that temporarily charges no interest, and then transferring your high-interest credit card debt to that card, you can save money because your balance temporarily will not accrue interest charges as you pay it down.

But you need to hear one crucial warning: After the introductory interest-free or low-APR period ends, the interest rate generally jumps up. That means if you don’t pay your balance off during the introductory period, it will start to accrue interest charges again, and your balance will grow.

Recommended: How to Avoid Interest On a Credit Card

What to Look For in a Balance Transfer Card


There are a number of different balance transfer credit cards out there. They vary in terms of the length of no-interest introductory periods, credit limits, rewards, transfer fees, and APRs after the introductory period. You’ll want to shop around to see which card makes sense for you.

When researching balance transfer credit cards, try to find a card that offers a 0% introductory APR for balance transfers. Ideally, the promotional period will be on the longer side to give you more breathing room to pay off your debts before the standard APR kicks in — one of the key credit card rules to follow with a balance transfer card.

You’ll also want to keep in mind fees when comparing your options. Balance transfer fees can seriously eat into your savings, so see if you qualify for any cards with $0 balance transfer fees. If that’s not available, at least do the math to ensure your savings on interest will offset the fees you pay. Also watch out for annual fees.

Last but certainly not least, you’ll want to take the time to read the fine print and fully understand how a credit card works before moving forward. Sometimes, the 0% clause only applies when you’re purchasing something new, not when transferring balances. Plus, if you make a late payment, your promotional rate could get instantly revoked — perhaps raising your rate to a higher penalty APR.

Should I Do a Balance Transfer?

Sometimes, transferring your outstanding credit card balances to a no-interest or low-interest card makes good sense. For example, let’s say that you know you’re getting a bonus or tax refund soon, so you feel confident that you can pay off that debt within the introductory period on a balance transfer credit card.

Or, maybe you know that you need to use a credit card to cover a larger purchase or repair, but you’ve included those payments in your budget in a way that should ensure you can pay off that debt within the no-interest period on your balance transfer card. Again, depending upon the card terms and your personal goals, this move could prove to be logical and budget-savvy.

Having said that, plans don’t always work out as anticipated. Bonuses and refund checks can get delayed, and unexpected expenses can throw off your budget. If that happens, and you don’t pay off your outstanding balance on the balance transfer card within the introductory period, the credit card will shift to its regular interest rate, which could be even higher than the credit card you transferred from in the first place.

Plus, most balance transfer credit cards charge a balance transfer fee, typically around 3% — and sometimes as high as 5%. This can add up if you’re transferring a large amount of debt. Be sure to do the math on how much you’d be saving in interest payments compared to how much the balance transfer fee will cost.

Recommended: When Are Credit Card Payments Due

Balance Transfer Card vs Debt Consolidation Loan

Both a personal loan and a balance transfer credit card essentially help you pay off existing credit card debt by consolidating what you owe into one place — ideally at a better interest rate. The difference comes in how each works and how much you’ll ultimately end up paying (and saving).

A debt consolidation loan is an unsecured personal loan that allows you to consolidate a wider range of existing personal debt, including credit card debt and other types of debt. Basically, you use the personal loan to pay off your credit cards, and then you just have to pay back your personal loan in monthly installments.

Personal loans will have one monthly payment. Plus, they offer fixed interest rates and fixed terms (usually anywhere from one to seven years depending on the lender), which means they have a predetermined payoff date. Credit cards, on the other hand, typically come with variable rates, which can fluctuate based on a variety of factors.

Just like balance transfer fees with a credit card, you’ll want to look out for fees with personal loans, too. Personal loans can come with origination fees and prepayment penalties, so it’s a good idea to do your research.

How to Make a Balance Transfer

If, after weighing the pros and cons and considering your other options, you decide a balance transfer credit card is the right approach for you, here’s how you can go about initiating a balance transfer. Keep in mind that you’ll need to have applied for and gotten approved for the card before taking this step.

Balance-Transfer Checks


In some cases, your new card issuer will provide you with balance-transfer checks in order to request a transfer. You’ll need to make the check out to the credit card company you’d like to pay (i.e., your old card). Information that you’ll need to provide includes your account information and the amount of the debt, which you can determine by checking your credit card balance.

Online or Phone Transfers

Another way to initiate a balance transfer is to contact the new credit card company to which you’re transferring the balance either online or over the phone. You’ll need to provide your account information and specify the amount you’d like to transfer to the card. The credit card company will then handle transferring the funds to pay off the old account.

The Takeaway

Whether you should consider a balance transfer credit card largely depends on whether the math checks out. If you can secure a better interest rate, feel confident you can pay off the balance before the promotional period ends, and have checked that the balance transfer fees won’t cancel out your savings, then it may be worth it to make a balance transfer.

Whether you're looking to build credit, apply for a new credit card, or save money with the cards you have, it's important to understand the options that are best for you. Learn more about credit cards by exploring this credit card guide.

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Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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In our digital world we like things to happen immediately. Unfortunately, it can take days, if not weeks, for a credit card refund to appear on a cardholder’s account.

How long does it take for a refund to appear on a credit card? Keep reading for insight into how credit card refunds work, types of refunds, and tips for getting your refund faster.

What Is a Credit Card Refund?

Before we can properly explain what a credit card refund is, it’s helpful to understand how credit card purchases work and who the main players are.

For every credit card transaction, there are two companies that help facilitate the purchase: credit card issuers and credit card networks. The credit card issuer is the company that creates and manages the credit card. The company essentially lends money to the cardholder to make a purchase. The credit card network is the business that processes the transaction electronically. It does this by transferring the money from the credit card issuer to the merchant.

Whenever someone makes a purchase with a credit card, the credit card issuer is the one to pay the merchant. Later, the cardholder pays the credit card issuer back.

With credit card refunds, this entire process works the same way but in reverse. When a merchant refunds a purchase, the money goes to the credit card issuer. Then the credit card issuer returns that amount to the cardholder’s account.

Recommended: What Credit Score is Needed to Buy a Car

How Does a Credit Card Refund Work?

As briefly noted above, when a consumer requests a credit card refund through a merchant, the merchant issues the refund directly to the credit card issuer, and then the issuer pays the account holder back. This is why merchants don’t typically refund credit card purchases in cash.

If the cardholder pays off their balance in full before a refund hits their account, they may end up with a negative balance. In this case, a negative is a good thing: It just means you have a credit on your account instead of the usual charges. You don’t need to do anything about a negative balance.

Types of Credit Card Refunds

There is only one type of credit card refund that consumers are involved in. The merchant and the credit card issuer (with the use of a credit card network) will work together to complete the refund and to get the money to the consumer.

Potential Delays for Credit Card Refunds to Appear

Exactly how long does it take for a refund to appear on a credit card? The timeline can vary based on a few variables. It can take time to process a refund, and all the consumer can do is wait.

In general, the retailer’s return policy dictates how long a consumer will wait to get their refund. Most retailers have a policy of refunding a purchase within three to five business days. The return policy can usually be found on the retailer’s website.

Online returns can be particularly lengthy and usually take longer to process than in-store returns because shipping is involved. It can take over a week just for the returned package to arrive and be processed before the refund process is initiated. Then the cardholder has to wait for the refund to appear on their monthly statement. Let’s look at an example of how this can work.

Let’s say a consumer makes a return on the 16th of the month and requests a refund. But their credit card closing date is the 15th. The consumer won’t see a refund appear until the next month’s statement. To discover exactly when a refund appears on the credit card statement balance, the consumer can review their account online for more up-to-date information.

Of course, this timeline can extend further if delays occur. Here’s a few examples of common issues that cause refund delays.

Billing Disputes

Getting a billing dispute taken care of can take longer than a standard refund. In that case, the customer must file a dispute with the credit card company to receive a credit. Some examples of issues that may require a dispute are:

•   Being billed for a product you didn’t receive

•   Getting charged twice for the same purchase

•   Failing to receive credit for a payment

Mistakes happen and billing disputes can take a while to resolve. In some cases, a credit card chargeback may be necessary.

Merchant Delays

All merchants have their own timeline for processing credit card returns. It can take a week or two depending on how slowly the merchant tends to process their refunds.

Cases of Identity Theft

If someone needs a refund for a purchase on their account that is a result of identity theft, it can take quite a while to fully resolve that issue.

How Does a Credit Card Refund Affect Your Credit?

If someone doesn’t pay off their credit card balance while waiting for a return to process, they will carry the balance on their credit card. In addition to expensive interest charges, carrying a balance affects the consumer’s credit utilization ratio, which can harm their credit score.

A credit utilization ratio compares how much available credit someone has to how much of it they’re using. Ideally, it’s best to keep the utilization ratio below 30%. Financial software like SoFi offer free credit monitoring, a debt payoff planner, and other handy tools to make sure you aren’t taken by surprise.

Recommended: What is The Difference Between Transunion and Equifax

Tips To Get a Faster Credit Card Refund

The best chance someone has at getting a quick refund is simply to make the return as soon as possible. If a consumer is in a rush to get their money back, they can request a store-credit refund from the merchant, which will be issued immediately.

That means the customer will have to spend that money in-store, leaving the purchase amount on the credit card bill to be paid off. On the bright side, this method results in the cardholder getting to keep any cash back or rewards points that the purchase earned.

Recommended: Does Applying For a Credit Card Hurt Your Credit Score

The Takeaway

It can take anywhere from a few days to a few weeks for a refund to appear on a credit card. The exact timeline varies based on the merchant and credit card issuer involved, as well as other factors that can cause delays (such as slow shipping times). Patience is key, but it helps to be aware of what the merchant’s and credit card issuer’s return policies and expected timelines are.

Want to take your savings to the next level? SoFi’s money tracker app makes it possible to set monthly spending targets, review top spending categories, and set multiple goals.

Learn how SoFi can help make managing money easier today!

FAQ

How long do refunds take to show up on credit cards?

It can take as little as three days for a refund to show up on a credit card. That said, it can take longer depending on the merchant and credit card issuer involved. Returns that require shipping back merchandise can take the longest, because the consumer has to wait for the merchandise to arrive and be processed before a refund can be initiated.

Why is my refund not showing up on my credit card?

A refund can take days, if not weeks, to show up on a credit card. Don’t be afraid to check in with the credit card issuer on the status of a refund. Instead of waiting for a new statement to come in the mail at the end of the month, it can be more expedient to review an online account statement.

Why do card refunds take so long?

Credit card refunds can take a while for a few reasons. To start, all merchants and credit card issuers have different refund timelines. Other things like slow shipping times (for online purchases) or issues with identity theft can cause additional delays.

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Photo credit: iStock/Passakorn Prothien

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Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .

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In a perfect world, you’d be able to zap away debt in a flash. But the reality is, sprinting through payments on high-interest debt isn’t exactly easy to do. That’s because you’ll still need to juggle staying on top of bills and covering daily expenses, among other financial obligations.

If you’re wondering whether it’s better to pay off your credit card or keep a balance, the answer largely depends on your particular set of circumstances. Let’s take a look at the pros and cons of paying off credit cards in full vs. over time to help you determine if you should pay off your credit card in full or space payments out a bit.

Recommended: When Are Credit Card Payments Due

Does Paying Down Credit Cards Slowly Affect Your Credit Score?

Paying off credit cards slowly can impact your credit score because it can affect your credit utilization, which makes up 30% of your consumer credit score. When you’re slow to pay off your credit card balance, your credit utilization — or how much of your total credit you’re using — can be higher. A higher credit utilization rate can adversely affect your credit score.

What Is Credit Utilization?

Credit utilization measures how much credit you have against how much credit you’ve used. This ratio is expressed as a percentage. You can find your credit utilization ratio by dividing your total credit card balances by your total credit limits across all of your cards.

How Credit Utilization Works

As we discussed, credit utilization is expressed as a percentage, and you can find it by dividing your credit card balances by your credit limits. As an example, let’s say you have three credit cards, and your total credit limit across those cards is $30,000. The total of your credit card balances on all three cards is $9,000.

In that case, your credit utilization is 30%, as demonstrated by the math below:

Credit limit on Card 1: $8,000
Credit limit on Card 2: $12,000
Credit limit on Card 3: $10,000

Total credit limit: $8,000 + $12,000 + $8,000 = $30,000
Total balances across Cards 1, 2, and 3: $9,000

$9,000 / $30,000 = 0.30, or 30%

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How Credit Utilization Can Affect Your Score

The lower your credit utilization, the better it is for your credit score. It’s generally recommended to keep your credit utilization ratio under 30% to avoid negative effects on your score. Keeping your score below this threshold indicates to lenders and creditors that you aren’t stretched financially, are a responsible user of credit, and have available credit that you can tap in to.

If you’re wondering, do credit card companies like it when you pay in full? The answer is that it certainly helps with your credit score, as a low credit utilization ratio can positively impact your credit score, and credit card companies generally look more favorably upon higher credit scores.

Recommended: Tips for Using a Credit Card Responsibly

Differences Between Paying a Credit Card in Full vs Over Time

Trying to determine whether you should pay off your credit card in full? Here are some of the key differences between paying off credit cards in full compared to making payments over time:

Paying a Credit Card in Full	Paying a Credit Card Over Time
Might need to spend less or earn more to speed up payments	Can make payments based on current income and budget
Can save money on interest charges	Costs more in interest payments
Frees up money sooner for other financial goals	Continue juggling debt payoff with other financial goals for longer
Can lower credit utilization, potentially improving your credit score	Won’t make as much of an impact in lowering credit utilization

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Reasons to Always Pay Off Your Credit Card in Full

When it comes to paying off your credit card in full, there are a handful of reasons why it could be a good idea:

•   Helps with your credit score: As we talked about, paying off your card balance means keeping a lower credit utilization, which can help keep you maintain a solid score.

•   Frees up money for other goals: By paying off your credit card bill sooner than later, you’ll free up that money you were putting toward debt payments. In turn, you’ll have “extra” cash to put toward savings, retirement, and your short-term and long-term goals.

•   Allows you to save on interest: The longer you stretch out your payments, the more you’ll end up paying in interest. By paying off your credit card in full each statement cycle, you won’t owe interest, given how credit card payments work.

Reasons to Pay Down Your Credit Card Over Time

While it may be ideal to pay off your credit card all at once, credit card debt is hard to pay off — especially when you’re spinning a lot of plates money-wise. Let’s take a look at why you might opt to pay down your credit card over time instead:

•   Allows for a more manageable debt payment schedule: Paying down your credit card over time won’t put pressure on you to cut back on your living expenses, or find ways you earn more so you can pay off your credit card balance more quickly. Depending on your situation, gradually making payments might feel like the more reasonable route.

•   Frees up money now: By not focusing on aggressively paying off your credit cards, you can potentially work on other money goals, such as saving for retirement or creating an emergency fund. Still, you’ll want to at the very least make your credit card minimum payment to avoid the consequences of credit card late payment.

Strategies for Paying Off Credit Card Debt

If the idea of paying off your credit card debt feels overwhelming, here are a few popular strategies to consider for crushing your debt.

Debt Avalanche Method

With the debt avalanche method, you focus on paying off the card with the highest interest rate first. Meanwhile, you’ll continue making the minimum payments on all of your other accounts.

Once your account with the highest interest rate is paid off, you’ll move on to focusing on the account with the next highest rate, continuing to make minimum payments on the others. You’ll continue this cycle until all of your debt is paid off.

The major benefit of this method is that you’ll save on interest payments.

Recommended: How to Avoid Interest On a Credit Card

Snowball Method

In this strategy, you make the minimum payments on all your cards by the credit card payment due date. Then, you put any remaining funds toward paying off the card with the lowest balance. Once that’s paid off, you move on to the card with the next lowest balance.

The main advantage of the snowball method is that it keeps you motivated to continue to pay off your debt. That’s because it feels good to get a card paid off, which is easier to do with a card that has a lower balance.

Debt Consolidation

With debt consolidation, you take out a new loan that you then use to pay off all of your outstanding debts. This effectively rolls all of your credit card payments into a single fixed payment each month.

In turn, debt consolidation can simplify your payments, and potentially lower your payments. However, depending on the new payment schedule and terms, you might end up paying more in interest over the course of the loan. Also keep in mind that you’ll generally need a decent credit score to qualify for debt consolidation.

Recommended: Does Applying For a Credit Card Hurt Your Credit Score

When Carrying a Balance Hurts Your Credit Score

Carrying a balance on your credit card hurts your score if it pushes your credit utilization too high. You’ll want to keep your credit utilization under 30% to avoid adverse effects.

Keeping a low balance, which decreases your credit utilization, can help your credit score. Besides paying off your cards, other ways to lower your credit utilization are to open a new credit card or request a credit limit increase. Both of these actions will increase your overall credit limit, thus potentially improving your credit utilization rate.

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The Takeaway

While paying a credit card in full can help with your credit utilization, which also can improve your score, it’s not always realistic. You’ll want to weigh the pros and cons of both paying off credit cards in full and making payments over time to see which one is right for your current situation.

While making credit card payments is one way to lower your credit utilization, another option is opening a new credit card.

If you’re looking for a new credit card, you might apply for a credit card with SoFi.

The SoFi Credit Card offers unlimited 2% cash back on all eligible purchases. There are no spending categories or reward caps to worry about.¹

Take advantage of this offer by applying for a SoFi credit card today.

FAQ

Is it better to pay off your credit card or carry a balance?

While paying off your credit card in full can help with your credit utilization ratio and save you on interest, spreading out your payments over time might make debt payoff more manageable. Which approach is best depends on your financial situation and preferences.

Does completely paying off a credit card raise your credit score?

Paying off a credit card can lower your credit utilization, which can positively affect your credit score.

Why did my credit score go down when I paid off my credit card?

Paying off your credit card doesn’t usually bring down your credit score. However, your credit score may drop if you closed your account after paying it off, as that can impact your credit mix or the average age of your accounts. It could also decrease your available credit, which can drive up your credit utilization.

Do credit card companies like it when you pay in full?

Paying in full shows creditors that you’re a responsible cardholder and that you have the financial means to pay off what you owe. It can also help to improve your credit score, which credit card companies look upon favorably.

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Photo credit: iStock/Foxyburrow

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Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .

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