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If your credit isn’t stellar, you may find it challenging to get approved for a traditional unsecured credit card. One option can be a prepaid or secured credit card, which can be more easily available than an unsecured credit card. However, these cards come with a few key differences. Understanding how a prepaid card and a secured card vary can help you choose the right one for your specific situation.

When you apply for a secured credit card, you will put down a refundable security deposit. This serves as your initial credit limit, and you can borrow against that initial deposit. Your borrowing history on a secured credit card is typically reported to the major credit bureaus and will impact your credit score.

On the other hand, a prepaid card serves more like a debit card without being attached to your bank account. You load it with a given amount of money and can use it to pay for purchases without affecting your credit.

Learn more about the similarities and differences, including:

•   What is a prepaid credit card and how does it work?

•   What is a secured credit card and how does it work?

•   How are secured vs. prepaid credit cards the same?

•   How are prepaid vs. secured credit cards different?

•   How do prepaid credit cards vs. secured credit cards impact your credit?

What Is a Prepaid Credit Card?

A simple way to think about what prepaid credit cards are is that they are just debit cards that aren’t tied to your bank account. Worth noting: These aren’t truly credit cards because you aren’t being extended credit; no one is lending you funds. For this reason, you may hear them referred to as just “prepaid cards” (which is what you’ll see as you keep reading).

You purchase a prepaid card (often with an activation fee) and can then use the card to make purchases. Because prepaid cards are not considered a loan, their use is not reported to the major credit bureaus. This means that they do not have a positive or negative impact on your credit score or credit history.

How Prepaid Cards Work

When you buy a prepaid card, it comes loaded with a specific amount of money on it. Generally prepaid cards are issued by some of the major credit card processing networks (e.g. Visa or Mastercard). Once you have purchased the prepaid card, you can then use it anywhere that network is accepted. Some prepaid cards only have a certain amount loaded onto them that is fixed at purchase, and others allow you to reload the card at your convenience.

Pros and Cons of Prepaid Cards

One positive thing about using a prepaid card is that it can make purchases much more convenient. It can also be more secure than carrying cash for all of your purchases.

However, a potential downside to using them is that, if you are wondering, “Do prepaid cards help build credit,” the answer is a hard no. So if you are looking for an option that can help improve your credit score, you’ll need to look elsewhere.

What Is a Secured Credit Card

If you’re looking for an alternative to a traditional unsecured credit card, you will also probably want to understand what secured credit cards are. A secured credit card is a type of credit card that requires you to apply (which likely involves a credit check). If approved, you put down an upfront security deposit to the lender. This upfront deposit will serve as your initial credit limit, and it determines the amount of money you can spend on your card.

How Secured Credit Cards Work

With an unsecured credit card, you will put down an initial deposit. Some secured credit cards have a specific amount that you must put down, and other secured cards may allow you to put down more of a deposit. As you spend money on your secured credit card, your available credit decreases. However, you can likely increase your credit line by making payments or additional deposits.

Pros and Cons of Secured Credit Cards

One of the biggest pros of a secured credit card can be that your usage is reported to the major credit bureaus. In other words, if you use it responsibly, the card can help build your credit.

Many banks that issue secured credit cards also provide a pathway to automatically increase your credit line and help you transition from a secured to a unsecured credit card. One thing to watch out for is that some secured credit cards come with high interest rates and/or fees, so it can be worthwhile to pay your balance in full each month, whenever possible.

Recommended: Secured vs. Unsecured Credit Card: What’s the Difference?

Secured vs Prepaid Cards

Here is a quick look at how prepaid cards compare to secured credit cards in a few key areas:

	Secured Credit Cards	Prepaid Cards
Secure and convenient payment method	Yes	Yes
Reports to major credit bureaus	Yes	No
Affects your credit score	Yes	No
May be easier to be approved as compared to a traditional credit card	Yes	No approval necessary

Is One Better for Establishing Credit?

If you’re looking to establish your credit, a secured credit card is definitely your better option. Prepaid cards are not considered loans so they are not reported to the major credit bureaus. This means that using a prepaid card will not have any impact on building your credit. Using a secured credit card responsibly can help you build credit, but it can take a while to build credit with a secured credit card.

Is a Secured or PrepaidCard Right for You?

Deciding whether a secured or prepaid card is right for you depends on what your overall goals are. If you’re just looking for a convenient and secure way to make purchases without impacting your credit, a prepaid card can be a great choice.

But if you’re looking to build or establish your credit, you might consider a secured credit card. Of the two, a secured card is the only one where your usage and payment history is reported to the major credit bureaus.

Recommended: Tips for Using a Credit Card Responsibly

The Takeaway

Prepaid cards and secured credit cards are both options that allow people with limited or poor credit histories to make secure and convenient payments. Both options allow you to easily pay for purchases wherever their issuer (e.g. Mastercard or Visa) is accepted. But usage of prepaid cards is not reported to the major credit bureaus, so it won’t have an impact on your credit score. If you’re looking to build your credit, you will be better off with a secured card.

Once you have established a solid credit history, you might consider a credit card that lets you earn cashback rewards with every eligible purchase. If you’re in the market for a new credit card, you might apply for a credit card like the SoFi Credit Card. With the SoFi Credit Card, you can earn cash-back rewards, which you can then use for travel or to invest, save, or pay down eligible SoFi debt.

The SoFi Credit Card: So simple, so rich in perks.

FAQ

Are prepaid cards more secure?

Prepaid cards are typically issued by one of the major card issuers, like Mastercard or Visa. Each of these issuers is known for payment security. One thing to watch out for with a prepaid card is that it works just like cash — if you lose your card, you’re likely to lose all of the money that is stored on your card.

What is one disadvantage of a prepaid card?

One disadvantage of a prepaid card is that your usage is not reported to the major credit bureaus. This means that using a prepaid card will not appear on your credit report and will not have any impact on your credit score. If you’re looking to build your credit, however, you’re better off getting either a traditional credit card or a secured credit card.

What are the downsides of getting a secured credit card?

A secured credit card can be a good option if you’re looking to build your credit and are having trouble getting approved for a traditional unsecured credit card. One downside of a secured credit card to keep in mind is that you will have to put down a security deposit upon being approved. Many secured credit cards also come with higher-than-average interest rates and fees, so make sure you watch out for that as well.

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Photo credit: iStock/Elena Uve

SoFi cardholders earn 2% unlimited cash back rewards when redeemed to save, invest, a statement credit, or pay down eligible SoFi debt.

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.

The SoFi Credit Card is issued by SoFi Bank, N.A. pursuant to license by Mastercard® International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.

¹See Rewards Details at SoFi.com/card/rewards.

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.

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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Having a good time doesn’t have to be expensive. In fact, there are plenty of fun and interesting things to do that don’t cost any money at all.

While it may take a little more research and imagination, it’s possible to find new and entertaining activities to do on your own or with your family and friends without busting your budget.

If you’re looking for some fun ways to save money, read on. We’ve got 27 ideas.

Fun Free Things To Do

If you find that you often spend your free time binge-watching shows or scrolling through social media on your phone, it may be time to work some new activities into your repertoire. Fortunately, that doesn’t have to mean breaking out your wallet.

Consider trying one (or a few) of these fun, free activities.

1. Going on a Hike

If the weather is nice outside, then it could be time to hit the great outdoors and take a hike. You can search for nearby hikes at AllTrails.com . You’ll also be able to check out the length and difficulty of the trail, as well how long it takes to hike.

2. Volunteering with a Local Organization

Volunteering can be a great cost-free activity because it allows you to give back, potentially meet some new people, and feel good about how you spent your day. To find local volunteering opportunities, you can check out VolunteerMatch.org , which matches people with local organizations that need help.

3. Playing Board Games

When looking for fun things to do with the family, consider busting out a game of Monopoly or Life and competing against one another. You might reward the winner with a few days or a week off from their everyday chores.

💡 Quick Tip: Banish bank fees. Open a new bank account with SoFi and you’ll pay no overdraft, minimum balance, or any monthly fees.

4. Decluttering the House

While this might not be the first thing that comes to mind when looking for a fun way to spend your free time, cleaning and being productive can actually be very satisfying, and also help relieve stress. You can declutter alone or get the kids involved. Consider donating your discards to a local charity or thrift store.

Recommended: Is Hiring a Maid or Cleaning Service Worth It?

5. Going to a Free Museum Day

Many museums will offer free admission once a week or once a month. You can spend an afternoon browsing through the beautiful works of art without spending a dime.

6. Having a Picnic in the Park

Dining al fresco doesn’t have to be pricey if you head for a local park. A picnic can be a great way to spend a liesurely afternoon with family and friends. All you need is a blanket, lunch, a ball or Frisbee, and a shady spot.

Recommended: 13 Cheap Ways to Live

7. Streaming an Exercise Video

Gym memberships, personal trainers, and exercise classes can be expensive. However, exercise videos on YouTube and Instagram are totally free. Consider breaking out the sweats and burning some calories for free.

8. FaceTiming With Friends and Family

Whether you prefer an old-fashioned phone call or a video call, reconnecting with an old friend or a family member you haven’t spoken with in a while can be an enjoyable, no-cost way to spend some free time.

9. Trying Meditation

Meditating can be a relaxing solo activity that helps to clear your mind and reduce stress. You can find free meditations on YouTube, or you might want to check out Headspace, which has guided meditation for beginners and offers a free trial.

💡 Quick Tip: An emergency fund or rainy day fund is an important financial safety net. Aim to have at least three to six months’ worth of basic living expenses saved in case you get a major unexpected bill or lose income.

10. Playing Free Games Online

Playing games online can be a fun way to spend a rainy afternoon with the kids. You can find free educational games for kids on sites like Funbrain .

11. Going to the Beach Off Hours

Hitting the beach in the late afternoon or early morning is often free. At these times you’re also likely to find fewer crowds, as well as beautiful light.

Recommended: 10 Ways to Avoid Paying Full Price for Anything

12. Starting a Journal

Journaling can be a great way to get things off your mind, collect your thoughts, and even come up with solutions to nagging problems. All you need is a pen and an old notebook to get started.

13. Visiting Your Local Library

You can not only find great books to read at your local library, but also pick up DVDs, CDs, and audio books, and possibly also attend a lecture, film screening, or other free community event.

14. Cooking Something New

Consider shopping your cupboard, fridge, and freezer, and then looking for something you can make with what you have on hand. You can find plenty of free recipes at sites like Allrecipes and Food Network.

15. Checking Out a Fire Station

Kids typically love fire trucks. Consider reaching out to your local fire station to see if they offer tours. This is not only a fun, free family activity, but allows kids to learn all about how the fire department works while meeting their local heroes.

💡 Quick Tip: When you feel the urge to buy something that isn’t in your budget, try the 30-day rule. Make a note of the item in your calendar for 30 days into the future. When the date rolls around, there’s a good chance the “gotta have it” feeling will have subsided.

16. Making a Movie

Whether you have a video camera or just a smartphone, you have what you need to make a short film. You can have everyone in the family pitch in to create a storyline, sets, costumes, and props. You can then edit the film and share it online.

17. Learning a New Skill

Whether you want to get better at applying makeup or have always wanted to learn how to juggle or knit a scarf, you can likely find a great tutorial on YouTube.

Recommended: Ways to Control Excessive Spending Habits

18. Going to Local Historical Site

There are likely a number of places around town where you and your family can soak up some local history. Many towns also offer free walking tours.

19. Attending a Free Concert

During the summer, many towns will put on free concerts for everyone to enjoy. You might even bring a blanket and dinner for a nice evening out.

20. Doing a Puzzle

Putting together a large puzzle can be a fun and challenging activity to do alone or with friends and family. If you are tired of the ones you own, consider trading puzzles with a friend or neighbor so you have something new to tackle.

Recommended: How to Stop Spending Money

21. Camping in the Backyard

In warmer weather, camping in the backyard offers an opportunity for fun, free adventure with the kids. If you don’t have a tent, consider borrowing one for the night. You can make a fire (or light up the grill) to roast marshmallows and tell ghost stories before bed.

22. Starting a Book Club

While this can take a little planning, book clubs are relatively easy to set up. You can create a private book club on Facebook or another social media platform. Or, you can recruit a group of book-loving friends to meet once a month at each other’s homes.

23. Washing the Car

You can have fun and accomplish something at the same time by getting your kids involved in washing the car. You could even host a neighborhood car wash so the kiddos can earn some pocket money.

Recommended: How to Be Better With Money

24. Heading to the Dog Park

This can obviously be a great idea if you have a dog, but can also be entertaining if you don’t. You can grab a bench and have fun watching cute dogs run around and play. Dog parks can also be fun for people watching.

Recommended: 19 Tips to Save Money on Pet Care

25. Trying a New Playground

Your kids probably know all the local playgrounds pretty well. For a change of pace, consider checking out a playground you’ve never been to in a town nearby. Pack a lunch to make it feel like a mini-vacation.

26. Writing a Letter

Writing letters may seem old-fashioned, but it can be a nice way to communicate with your loved ones. The letter can be handwritten and sent via snail mail, or you might just want to send an email updating a friend or family member about what’s going on in your life.

27. Building a Fort

Kids typically love building forts. On a cold or rainy day, you can have an indoor adventure by breaking out some chairs and blankets and letting the kids create their own little hideaway filled with their favorite books and toys. They may even wind up sleeping in the fort for the night.

The Takeaway

It can take thinking a little outside the box and a bit of planning, but it’s possible to entertain yourself and your family with fun new activities without busting your budget.

Better banking is here with SoFi, NerdWallet’s 2024 winner for Best Checking Account Overall. Enjoy up to 4.60% APY on SoFi Checking and Savings.

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SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2023 SoFi Bank, N.A. All rights reserved. Member FDIC. Equal Housing Lender.
The SoFi Bank Debit Mastercard® is issued by SoFi Bank, N.A., pursuant to license by Mastercard International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.

SoFi members with direct deposit activity can earn 4.60% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Direct Deposit means a deposit to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below). Deposits that are not from an employer or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, do not constitute Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate.

SoFi members with Qualifying Deposits can earn 4.60% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that, in the aggregate, are equal to or greater than $5,000 to an account holder’s SoFi Checking and Savings account (“Qualifying Deposits”) during a 30-day Evaluation Period (as defined below). Qualifying Deposits only include those deposits from the following eligible sources: (i) ACH transfers, (ii) inbound wire transfers, (iii) peer-to-peer transfers (i.e., external transfers from PayPal, Venmo, etc. and internal peer-to-peer transfers from a SoFi account belonging to another account holder), (iv) check deposits, (v) instant funding to your SoFi Bank Debit Card, (vi) push payments to your SoFi Bank Debit Card, and (vii) cash deposits. Qualifying Deposits do not include: (i) transfers between an account holder’s Checking account, Savings account, and/or Vaults; (ii) interest payments; (iii) bonuses issued by SoFi Bank or its affiliates; or (iv) credits, reversals, and refunds from SoFi Bank, N.A. (“SoFi Bank”) or from a merchant.

SoFi Bank shall, in its sole discretion, assess each account holder’s Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 4.60% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.

SoFi Bank reserves the right to grant a grace period to account holders following a change in Direct Deposit activity or Qualifying Deposits activity before adjusting rates. If SoFi Bank grants you a grace period, the dates for such grace period will be reflected on the APY Details page of your account. If SoFi Bank determines that you did not have Direct Deposit activity or $5,000 in Qualifying Deposits during the current 30-day Evaluation Period and, if applicable, the grace period, then you will begin earning the rates earned by account holders without either Direct Deposit or Qualifying Deposits until you have Direct Deposit activity or $5,000 in Qualifying Deposits in a subsequent 30-Day Evaluation Period. For the avoidance of doubt, an account holder with both Direct Deposit activity and Qualifying Deposits will earn the rates earned by account holders with Direct Deposit.

Members without either Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, will earn 1.20% APY on savings balances (including Vaults) and 0.50% APY on checking balances.

Interest rates are variable and subject to change at any time. These rates are current as of 10/24/2023. There is no minimum balance requirement. Additional information can be found at https://www.sofi.com/legal/banking-rate-sheet.

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.

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.

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.

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An estimated 14 million Americans have at least $10,000 in credit card debt.

Five-figure credit card debt, and the interest that accrues along with it, can feel overwhelming. It’s the kind of debt that keeps people up at night, and prevents them from pursuing their other financial goals.

But, that debt doesn’t have to stick around forever. With a strategy, chipping away at a $10,000 in credit card debt is achievable. Here are some options for how to pay off $10,000 in credit card debt.

Tips for Paying Off $10,000 in Credit Card Debt

Paying down $10,000 in credit card debt takes discipline and time. These tips and tools could help speed up the journey toward debt freedom.

Consider a Side Hustle

If your budget doesn’t have much wiggle room to make extra payments toward credit card debt, you might consider finding ways to generate more income. Starting a side hustle could be a powerful way to pay down a $10,000 credit card debt faster. Whether it’s grabbing a job in the gig economy or taking a catering job on the weekends, you can put those paychecks toward your credit card debt.

Ask for a Raise

If time is limited for a side hustle, think of how you could make more money in your current role. Is it time to ask for a raise, for instance?

Similarly, switching jobs may land you a higher salary. Nearly half of all Americans who switched roles last year saw an increase in salary. Just make sure that extra income goes toward debt payoff, and not lifestyle creep.

Switch to Cash

When you’re paying down $10,000 in credit card debt, it’s important to avoid accruing a higher balance. Adding more debt can not only feel discouraging, it can extend your payoff timeline.

As you tackle paying down debt, consider avoiding any further spending on credit cards. That can take the form of paying for things in cash, or using a debit card where you can only spend what you actually have. Making a switch to cash means you’re less likely to add to your burden of debt.

Debt Management Plans

While tips and tricks may help you pay down $10,000 in credit card debt, you may have to consider a larger overall strategy to move you towards payoff. Having a debt management plan in place can take some of the pressure away and could put you on a track toward paying off debt faster.

Two popular methods to accelerate debt repayment include the snowball and avalanche method.

The snowball method prioritizes paying off small debts first and working your way up. Here’s how:

1.    Make the minimum monthly payments on all debts.

2.    Take inventory of all your debts and order them from lowest outstanding balance to highest.

3.    Put any extra cash toward the smallest balance debt.

4.    Repeat this until the lowest debt is paid off.

5.    Next, move onto the next lowest debt, adding the surplus cash from step 2 to this card’s monthly payments.

6.    Continue to repeat this process, scaling up to the high-balance debts once you pay off the lower ones.

While this method can seem counterintuitive because of the interest that high balances can generate, starting off with small wins has psychological benefits for some. Having those wins early on may motivate you to move forward.

If you tend to be more disciplined and don’t mind playing the long game, you might prefer the debt avalanche method to pay off $10,000 in debt. Here’s how to deploy the avalanche method:

1.    Make minimum payments on all debts.

2.    Compile all your debt, and order it by interest rate from highest to lowest.

3.    Put any extra cash toward the debt with the highest interest rate.

4.    Repeat until the highest-interest debt it paid off.

5.    Move onto the debt with the next-highest interest rate. Put any extra cash toward this balance until it’s paid off.

6.    Continue this process, prioritizing the highest interest debt first, until all balances are settled.

Typically, the debt avalanche saves more money in interest payments in the long run. However, it can take time to see a win with this method, as opposed to debt snowball.

Credit Card Debt Forgiveness

Credit card debt forgiveness is not as simple as waving a magic wand at your balances and watching them disappear. Forgiveness does not mean the debt’s completely erased, and it comes with its own drawbacks.

Credit card debt forgiveness only becomes an option when a cardholder stops paying their debt and the credit card company sells the outstanding balance to a debt collector. From there, you can negotiate with the debt collector as to how much debt to repay.

Debt collectors buy debts for pennies on the dollar, and thus are willing to recuperate just a portion of the initial amount owed. For example, if you owe $10,000 in credit card debt and it goes to collections, you may be able to negotiate to settle the debt for just $5,000. That payment may be a lump sum or small payments over time.

While credit card debt forgiveness means paying less than the total owed, it has a fair share of drawbacks. Neglecting credit card debt can wreak havoc on a person’s credit score, and you’ll still need to pay some portion of the debt.

Additional Options for Paying Off Debt

Credit card debt forgiveness isn’t the only route toward paying off $10,000 in credit card debt. Depending on your situation, one of the following solutions may work.

Balance Transfers

Some credit card companies allow cardholders to make credit card balance transfers. That means you transfer the outstanding balance from one credit card to another, often with an introductory low interest rate or no interest.

Balance transfers do come with fees, but depending on how much you owe and how much you could save on interest, it could be worth it in the long run. However, keep in mind the interest rate the balance transfer offers may be for a limited time. You’ll want to pay off the remaining balance before the rate rises, or you could owe more than you did before the transfer.

Personal Loans

There are a number of common uses for personal loans, including paying off credit card debt. Often, a personal loan will have a lower interest rate than credit cards, which could help you pay down your debt faster and save on interest. If you’re struggling to figure out how to pay off $10,000 in credit card debt, consolidating multiple balances into a single loan also may streamline the process.

Your credit score can impact if you get approved for a personal loan, as well as what interest rate you receive. If you have a less than stellar credit score, you may not get approved. Using a personal loan calculator can help you determine if this strategy will net you savings and, if so, how much.

Recommended: Types of Personal Loans

The Takeaway

Paying down $10,000 in debt might not be easy, but with the right strategies, it is possible. This could mean adopting an aggressive payoff method or looking for additional options to pay down the debt, like personal loans.

If a personal loan sounds like the right fit for you, consider SoFi personal loans. SoFi has a simple online application and offers easy-to-use tools. You can view your rate in just 60 seconds, and get your loan funds as soon as the day your loan is approved.

SoFi’s Personal Loan was named NerdWallet’s 2024 winner for Best Personal Loan overall.

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Photo credit: iStock/ArtistGNDphotography

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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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.

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Not all debt is bad. In fact, taking out loans and using credit cards responsibly is how most people build credit to access low-interest loans in the future. However, a problem arises if budgeting is poorly managed or finances become tight.

In either case, it’s easy to slide further and further into debt with no clear path to financial freedom. Before you know it, you may end up with $50,000 in credit card debt, which can feel insurmountable. But instead of throwing up your hands, here are some tips for how to pay off $50,000 in credit card debt and get your finances back on track.

Tips for Paying Off $50,000 in Credit Card Debt

Unsure of how to pay down $50,000 in credit card debt? Here are some paths forward you may consider, depending on your financial situation and preferences.

1. Pay More Than the Minimum

If you only pay the minimum balance on your card each month, it will take you much longer to pay off the debt. That’s because you will continue to pay a high interest rate. If you can pay off more than the minimum and start chipping away at the principal loan amount, you’ll pay less in interest over time, and the debt will disappear faster.

2. Focus on High-Interest Debt First

High-interest debt is the most expensive, so you’ll save money if you can get rid of it sooner. Check your credit cards to see which one has the highest annual percentage rate (APR), and then pay that one off first. Then, use the amount you save once that card is paid off to work on paying down the card with the next-highest APR.

3. Pay Off the Card With the Lowest Balance First

A different approach to paying down credit card debt is to initially focus on the card with the lowest balance. This is known as the snowball method, and it can help you stay motivated to pay down debt when you see each card’s balance getting paid off one by one.

4. Review Your Expenses

You might be able to free up cash to put toward paying off your credit card debt by taking a close look at how you spend your money and perhaps creating a budget that’s a bit stricter.

A good place to start when looking for areas to cut back are monthly subscriptions that you’re not using or don’t need, such as streaming services or audiobooks. You might also consider whether you can change your lifestyle. Look for ways to reduce your expenses — perhaps you can eat out less, buy cheaper groceries, or downsize your home.

5. Use Extra Cash to Pay Down Your Debt

If you’re lucky enough to receive a bonus at work or an unexpected windfall, use it to pay down your debt rather than adding it to your spending pool. Also think about whether you could take on some gig work, which would allow you to increase your income temporarily while you focus on paying down some of your debt.

Debt Management Program

Another option you might explore to get a handle on $50,000 of credit card debt is a debt management program (DMP). Credit counseling agencies offer DMPs to help people better manage their finances through education and counseling.

These agencies are non-profit organizations that assign counselors to individuals who need help. The counselors provide advice and guidance, and negotiate with the client’s creditors to develop reduced payment plans. Creditors are eager to get paid back, so they’re usually amenable to lowering interest rates and waiving fees for clients who work with a DMP and show they’re serious about repaying their debt.

If you choose to work with a DMP, you’ll usually make a single monthly payment, which then gets distributed to your creditors. The DMP will lower the amount of interest you’re paying overall and remove late fees, which means more of your money goes toward paying down your principal. This translates to your debt getting paid off quicker.

There’s usually a fee for a credit counselor’s services, and you will be required to close all of the accounts under the DMP so that you don’t continue to rack up debt. Still, a DMP can help relieve financial stress since you’re taking concrete steps to improve your financial situation.

Credit Card Debt Forgiveness

Credit card forgiveness occurs when a creditor forgives you of debt. While this might sound like a surefire path to financial freedom, this is rare for credit card companies, and it usually comes at a cost. Instead, what credit card companies might do is agree to negotiate a settlement whereby you pay a portion of the amount you owe with penalties. If you’re three or more months behind and unable to catch up with payments, it’s possible to negotiate a settlement with a credit card provider.

That being said, a creditor is more likely to offer forgiveness right before selling your debt to a collector because they’ll have to sell the debt for less than the full amount you owe and lose money. Negotiating a settlement with you instead may minimize their losses. It’s even easier to pursue debt forgiveness from a debt collector because collectors can profit even if you only pay some of the amount you owe.

Note that forgiven debt is considered income by the IRS, so you will owe taxes on the forgiven amount.

Additional Options for Paying Off Debt

Other options for paying off $50,000 in credit card debt include taking out a debt consolidation loan, which is a common type of personal loan, or turning to a home equity loan or a balance transfer credit card.

Home Equity Loan

If you have equity in your home, a home equity loan might offer a lower interest rate than your credit card and provide cash to pay off some of that higher-interest debt.

However, you will have to factor closing costs into the equation. Also know that you’re putting your home at risk if you can’t stay on top of monthly payments.

Personal Loan

Among the many common uses for personal loans is debt management and consolidation. If approved, you can use the funds you receive from a personal loan to pay off your credit cards. This will consolidate your debt, leaving you with just one payment to worry about each month.

Ideally, you’ll be able to secure a lower interest rate as well, which can offer savings. A personal loan calculator can help you determine if lowering your interest rate and monthly payments with a personal loan could help you save on total interest.

Recommended: Get Your Personal Loan Approved

Balance Transfer

With a balance transfer, you move your existing credit card debts to another card, ideally one that offers a lower interest rate. Some balance transfer credit cards even offer a temporary introductory APR that’s as low as 0%, though you’ll generally need solid credit to qualify for the most competitive offers.

Just note that a balance transfer fee will apply, so you’ll need to factor that into your overall costs. Also make sure that you’ll be able to pay off your balance in full before the introductory APR ends — otherwise, the interest rate could rise dramatically.

The Takeaway

Figuring out how to pay off $50,000 in credit card debt can seem overwhelming. Luckily, there are a number of options at your disposal. You might try a debt payoff method like the debt snowball or the debt avalanche, or you might look for ways to cut back or bring in extra money to put toward debt payments. Seeking help through a DMP is another option if you’re struggling to get your financial life back in order.

Another possibility is consolidating your debt by taking out a personal loan. Loan amounts range from $5,000 to $100,000, and it’s possible to get funds the same day you sign – or you could have SoFi pay off your credit card directly.

SoFi’s Personal Loan was named NerdWallet’s 2024 winner for Best Personal Loan overall.

FAQ

Should I sign up for a debt management program?

Consider signing up for a debt management program if you feel overwhelmed by your debt. A credit counselor can consolidate your debts into one payment and simplify the debt repayment process, as well as offer general advice and guidance.

Should I seek credit card forgiveness?

Credit card forgiveness is rare to receive. However, you might be able to negotiate with your creditor to reduce the amount you owe, which can help relieve some of your debt burden.

How long will it take to pay off $50k in credit card debt?

How long it will take you to pay off $50,000 in credit card debt depends on the APR and the amount of your monthly payment. For example, assuming you’re not continuing to add to your debt, if you have an APR of 19.07% and make monthly payments of $2,000, it will take you 33 months to pay off your debt. If you were only paying $1,000 a month at that APR, it would take you 101 months.

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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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Knowing how long your retirement savings will last is a complicated, highly personal calculation. It’s based on how much you’ve saved, how you’ve chosen to invest your money, your Social Security benefit, whether you have other income streams — and more.

And even when you have all the information at your fingertips, it can be hard to make an accurate calculation, because life is fraught with unexpected events that can impact how much money we need and how long we’re going to live.

Taking those caveats into account, though, it’s still important to make an educated estimate of how much money you’re likely to accumulate by the time you retire, as well as how much you’re likely to spend.

What Factors Affect My Retirement Savings?

Here are some of the many variables that can come into play when deciding how long your retirement savings might last.

Retirement Plan Type

Whether it’s a defined-benefit plan like a pension, or a defined contribution plan like an employer-sponsored 401(k), 403(b), or 457, the kind of account you contribute to will likely have an impact on how much and what method you use to save for retirement.

Pension Plan

With a pension plan, retirement income is usually based on an employee’s tenure with the company, how much was earned, and their age at the time of retirement. Pensions can be a reliable retirement savings option when available because they reward employees with a steady income, typically once per month.

One potential downside, however, is that pension plans can be terminated if a company is acquired, goes out of business, or decides to update or suspend its employee benefits offerings. Indeed, pension plans have been far less common compared with defined-contribution plans like 401(k)s and 403(b)s and the like.

401(k) Plan

With a 401(k) plan, participants can contribute either a percentage of or a predetermined amount from each paycheck. The money is deposited pre-tax, and the accountholder generally owes taxes when they withdraw the money in retirement.

In some cases, the funds employees contribute are matched by their employer up to a certain amount (e.g. the employer might contribute 50 cents for every dollar up to 6%).

Unlike a pension plan, the amount of retirement funds the participant saves is based on how much they personally contributed, whether they received an employer match, the rate of return on their investments, and how long they’ve had the plan.

IRA or Roth IRA

An Individual Retirement Account (or Arrangement), or IRA, is a retirement account that’s not sponsored by an employer. Individuals set up and fund their own IRAs.

There are no income limits for a traditional IRA, but contributions are capped at $6,500 per year ($7,500 if you’re 50 and up).
A Roth IRA, on the other hand, has limits on contributions based on filing status and income level.

Less Common Plans

Other types of retirement plans like Employee Stock Ownership Plans (ESOP) and Profit Sharing Plans are less common and have their own unique benefits, drawbacks, and details.

Social Security

Social Security is a federally run program used to pay people aged 62 and older a continuing income. Social Security benefits are structured so that the longer you wait to claim your benefit check, the higher the amount will be.

Expected Rate of Return on Investments

If a person puts money into a defined-contribution plan or makes investments in stocks, bonds, real estate, or other assets, there are a number of return outcomes that could affect their retirement savings.

An investment’s performance is about more than just appreciation over time. Learning how to calculate the expected rate of return on the investment can help you get a clearer picture of what the payoff will look like when it’s time to retire.

Unexpected Expenses

One never really knows what retired life might bring. Lots of unexpected expenses could arise.

An extensive home repair or renovation or maybe even a costly relocation to another state or country might make an unforeseen dent in retirement funds.

A major medical incident or the factoring in of long-term care can be another unexpected expense, as are caregiver costs if you or a family member need help.

Some seniors are surprised to learn that health care can get costly in retirement and Medicare may not always be free. Many of the services they might need could require out-of-pocket payments that eat into savings.

As much as we might not want to imagine such scenarios, there could be the chance of a divorce during retirement, which could cause a redraft of the savings plan.

Creating a budget to estimate expenses is a great way to get ahead of any surprising financial setbacks that could sneak up down the line.

Inflation

Inflation can take a hefty toll on retirement savings. Even average rates of inflation might have a significant impact on how much retirement funds will actually be worth when they’re withdrawn. For example, $1,500 in January 2000 had the same buying power as $2,293.68 in March of 2020.

Understanding how inflation can affect your retirement savings might ensure you have enough funds padded out to support you for the long haul.

Market Volatility and Investment Losses

Regardless of financial situation or age, checking in on retirement accounts and the climate on Wall Street could help clarify how market swings might affect your retirement savings.

Retirees with defined contribution plans might suffer financial losses if they withdraw invested funds during a volatile market. Not panicking and having enough emergency funds to cover 3-6 months of living expenses can help you weather the storm. Talking to an investment advisor about rebalancing a portfolio to reduce risk is another option for getting ahead of this unexpected savings speedbump.


💡 Quick Tip: When people talk about investment risk, they mean the risk of losing money. Some investments are higher risk, some are lower. Be sure to bear this in mind when investing online.

Ways to Calculate How Much You Might Need to Retire

Are you on track for retirement? That’s something that can be calculated in many ways, which vary in efficacy depending on who you ask.

Here are a few formulas and calculations you can use to consider how much to save for retirement:

The 4 Percent Rule

The 4 Percent Rule, first used by financial planner William Bengen in 1994, assesses how different withdrawal rates can affect a person’s portfolio to ensure they won’t outlive the funds. According to the rule, “assuming a minimum requirement of 30 years of portfolio longevity, a first-year withdrawal of 4 percent, followed by inflation-adjusted withdrawals in subsequent years, should be safe [for retirement].” Bengen has since adjusted the rule to 4.5% for the first year’s withdrawal.

The jury is out on whether 4% is a safe withdrawal rate in retirement, but many people have used it to weather poorly performing stock markets.

The Multiply by 25 Rule

This one can get a little controversial, but the Multiply by 25 rule, which expanded upon Bengen’s 4% Rule with the 1998 Trinity Study, involves taking a “hoped for” annual retirement income and multiplying it by 25 to determine how much money would be needed to retire.

For example, if you’d like to bring in $75,000 annually without working, multiply that number by 25, and you’ll find you need $1,875,000 to retire. That figure might seem scary, but it doesn’t factor in alternate sources of income like Social Security, investments, etc.

This rule has been banked on by many retirees. However, it’s based on a 30-year retirement period. For those hoping to retire before the age of 65, this could mean insufficient funds in the later years of life.

The Replacement Ratio

The Replacement Ratio helps estimate what percentage of someone’s pre-retirement income they’ll need to keep up with their current lifestyle during retirement.

The typical target in many studies shows 70-85% as the suggested range, but variables like income level, marital status, homeownership, health, and other demographic differences all affect a person’s desired replacement ratio, as do the types of retirement accounts they hold.

Also, the Replacement Ratio is based on how much a person was making pre-retirement, so while an 85% ratio might make sense for a household bringing in $100,000 to $150,000 per year, a household with higher earnings — say $250,000 — might not actually need $212,000 each year during retirement. A way to supplement this calculation could be to estimate how much of your current spending will stay the same during retirement.

Social Security Benefits Calculator

By entering the date of birth and highest annual work income, the Consumer Financial Protection Bureau’s Social Security Calculator can determine how much money you might receive in estimated Social Security benefits during retirement.

Other Factors To Calculate

Expected Rate of Returns

Determining the rate of return on investments in retirement can help clarify how long your savings could last. An investment’s expected rate of returns can be calculated by taking the potential return outcomes, multiplying them by the likelihood that they’ll occur, and totaling the results.

Here’s an example: If an investment has a 50% chance of gaining 30% and a 50% chance of losing 20%, the expected rate of returns would be 50% ⨉ 30% + 50% ⨉ 20%, which is an estimated 25% return on the investment.

Home Improvement Costs

If a renovation is looking like it will be necessary down the line, you might calculate how much that home repair project could cost and factor it into your retirement planning.

Inflation

You might also consider using an inflation calculator to uncover what your buying power will really be worth when you retire.


💡 Quick Tip: How much does it cost to set up an IRA? Often there are no fees to open an IRA, but you typically pay investment costs for the securities in your portfolio.

Making Retirement Savings Last Longer

If you’re still wondering how long your savings will last or seeking potential ways to make it last longer, a few of these strategies could help:

Lower Fixed Expenses

Unexpected expenses are likely to creep up regardless of how much you save, but by lowering fixed expenses like mortgage and rent payments, food, insurance, and transportation costs, you might be able to slow the spending of your savings over time. Setting a budget is a solid way to see this in black and white.

Maximize Social Security

While opting into Social Security benefits immediately upon eligibility at 62 might sound appealing, it could significantly reduce the benefit over time. With smaller cost of living adjustments later in life, a lengthy retirement (people are living longer than ever before) could mean less money when you need it the most.

Stay Healthy

Unexpected medical expenses might still occur, but by safeguarding health and wellbeing earlier in life, you could avoid costly chronic conditions like high blood pressure, diabetes, or heart disease.

Keep Earning

Whether it’s staying in the full-time workforce for a couple more years or starting a ride-share side hustle during retirement, continuing to bring in money can help you stretch your savings out a little longer.

The Takeaway

Everyone wants a secure retirement. An important step in your retirement plan is calculating how long your savings will likely last. While there is no way to know for sure, this is such an important step in long-term planning that many different methods and strategies have evolved to help people feel more in control.

There are investment strategies, tax strategies, and income strategies that can help you create a realistic forecast of how you’re doing now, and how your retirement savings may play out in the future. Because there are so many risks and variables — from the markets to an individual’s own health — just having a basic calculation will prove useful.

Ready to invest for your retirement? It’s easy to get started when you open a traditional or Roth IRA with SoFi. SoFi doesn’t charge commissions, but other fees apply (full fee disclosure here).

Help grow your nest egg with a SoFi IRA.

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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.

Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

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