11 Ways To Pay Off Debt Fast

Paying off debt is no small task, but applying a strategic approach — or approaches — can speed up the process. You may need to temporarily make a few lifestyle changes, or you may not. This is because a lot of the tips below have to do with identifying and leveraging your current resources instead of going without.

The best way to pay off debt depends on your situation. Consider which work best for you and apply more than one to pay off debt fast.

1. Personal loan to pay off debt

Swapping one debt for another might not sound like a real solution to paying off debt. But it can be if you trade high-interest debt for a loan with a lower interest rate. That’s because you’ll owe less in interest, which means a lower monthly payment and/or a faster debt payoff schedule.

A personal loan is one option to consolidate high-interest debt, like credit card debt. Personal loans often have lower interest rates than credit cards. For example, personal loan annual percentage rates (APRs) for Discover, a Credible partner, start at 7.99%, but its Cash Back credit card has a minimum standard rate of 17.24%. In fact, credit card interest rates averaged 21.59% in February 2024, according to the Federal Reserve, while average rates on two-year personal loans were 12.49%.

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Debt consolidation pros and cons

Using personal loans to pay off debt can have several advantages, including:

• Fixed interest rate and fixed monthly payment (typically).
• Ability to improve credit with on-time payments.
• Easy to apply and loans may be funded as soon as the day you apply.

But there are also some disadvantages:

• Interest rates can be high, especially if you have a low credit score.
• Personal loans can have origination and other types of fees.
• You typically need good credit to get the best rates.

You’ll be in the best shape to get approved for a personal loan with a low interest rate if your FICO credit score is above 670, you have a reliable income, and your debt-to-income ratio (DTI) is less than 35%. But Credible has partner lenders that consider applicants with a 550 credit score.

2. Home equity to pay off debt

If you have home equity, you could potentially pay off debt even more quickly by tapping into it. This is because interest rates on home equity loans tend to be much lower than interest rates on your credit cards (and on personal loans).

Just note that loans that rely on your home’s equity can take up to a month or more to get approved, and since the home is collateral on the loan, you could potentially lose it if you don’t make payments.

• Home equity loan or HELOC: Home equity loans and home equity lines of credit (HELOCs) let you access the equity you have in your home, which you can use to consolidate debt. But there are closing costs that can become expensive, and the application process can take a month or more.
• Cash-out refinance: This entails replacing your current mortgage with a new one for more than you owe, and taking out the difference in cash to pay off your debt. You can potentially save a lot of money by trading your credit card and other debts for mortgage debt, but you also put your house on the line if you can’t make the new payments. Refinancing also has closing costs, and generally only makes sense if you can get a rate lower than your current mortgage.
• Selling your home: The advantage of selling your home for cash is clear — you’ll (hopefully) pocket a significant amount of money you can put toward debt payoff. But a major downside is that, if you sell your primary residence, you’ll need to find a new place to live (and come up with a down payment if you want to buy).

3. Use a 0% APR balance transfer

If you have good credit, you may qualify for a 0% APR balance transfer offer on a new credit card, or even receive an offer from your current credit card company. See if you can prequalify for 0% APR credit cards first — your credit score won’t be impacted unless you decide to apply for the card. Capital One and Discover are two companies that will let you prequalify without hurting your credit.

Just be sure you can afford to pay off the entire amount you transfer or at least the bulk of it before the introductory APR expires. Otherwise, you could be saddled with an APR up to 30% or more on the amount transferred, depending on the card. This could defeat the original purpose of the transfer and leave you in worse shape.

Related: Debt Consolidation Loan vs. Balance Transfer

4. Reduce current debt

In addition to putting more money toward debt repayment, there are ways to reduce the amount you need to repay in the first place. Here are some ideas to get you thinking:

• Negotiate: Try to negotiate your debt. It’s not always successful, but you’ll never know if you don’t ask, and persistence can help. Call your credit card companies and lenders to ask if they can offer lower monthly payments or better interest rates.
• Use a debt management plan (DMP): With the help of a credit counseling organization, you might consider a debt management plan to consolidate debts and secure lower interest rates. Though a DMP won’t have a direct impact on your credit, it could hurt it indirectly. For example, if the credit counselor requires that you close old accounts, it could hurt your score by negatively impacting your credit history and credit utilization.
• Replace expensive assets: If you’re making payments on expensive assets like a car or house, reduce your debt burden by downsizing. For example, you could replace a new car with a used one with a smaller payment, or move from a larger home to a smaller one.
• Use bankruptcy as a last resort: When you run out of options, bankruptcy is a way to clear up your debt by either liquidating nonexempt assets and writing off eligible debts, or getting set up with a payment plan. Note that in bankruptcy, you generally get to keep necessary assets like your home or car (as long as they’re not above a certain price point), but it’ll have a major negative impact on your credit score. Talk to a bankruptcy attorney to better understand your options and the costs to file (both monetary and credit-wise) before proceeding.
• Refinance: You can refinance all sorts of debt, including car loans, mortgages, and personal loans. Refinancing allows you to replace the current loan with a new one at a lower interest rate. If your credit has improved or rates have dropped since you got the original loan, refinancing can be a quick and easy win.

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5. Liquidate assets

Selling unused or unwanted items is a simple way to raise cash quickly. And if you’re in a hurry to pay off your debt, a little extra money can go a long way.

You can make significant money by either selling a few high-value items or a lot of lower-value items. When it comes to high-value items, think jewelry, electronics, and designer clothing. If you don’t have any high-value items you want to sell, you can still make money selling clothes and household items via an old-fashioned garage sale or more modern equivalents, like Facebook Marketplace, Poshmark, or Craigslist.

6. Cancel or downgrade subscriptions

Many people have a subscription they don’t know about, forgot about, or no longer need. For example, maybe you jumped on a free trial for a streaming service to binge that one show — and now, months later, you’re still paying for it. Rather than letting that money slip away month after month, reclaim that cash and funnel it toward debt payoff.

Pull up your bank statements and scan them for forgotten or overlooked subscriptions. Cancel any you don’t want and reroute that money toward your debt. If you don’t have any subscriptions you want to get rid of, consider downgrading to save a little money.

7. Cut spending

While reviewing your bank statements for unwanted subscriptions, analyze your spending as a whole. Chances are, there are some spending categories you can make cuts in to pay off your debt faster.

Here are a few ideas:

• Eliminate food delivery services and pick up takeout yourself.
• Cook dinner at home more often.
• Put a 1- to 3-month pause on new clothes spending and shop secondhand.
• Brew coffee at home or more often (if you buy a $5 cup of coffee three times a week, that’s almost an extra $50 you could save per month, not to mention tips).
• Have your friends over instead of going out.

While making these lifestyle changes can help you pay off your debt faster, don’t be tempted to cut everything enjoyable out of your life. Rewarding yourself along the debt payoff journey is as important as sticking to your plans.

8. Shop insurance quotes

While cutting discretionary expenses is great, don’t forget to audit your bills, too. One major expense to keep an eye on is insurance. If you chose a policy without comparing different insurers, chances are you’re leaving money on the table. Or, if your credit has since improved since taking the policy out, you could be eligible for much better rates.

Different insurance carriers have different criteria for how they price their coverage. You may qualify for one rate with Carrier A, but a lower rate with Carrier B. Shop insurance policies regularly to make sure you’re getting the best rates possible. Anytime you save money by switching policies or carriers, direct those savings toward your debt.

9. Strategically pay down debt

Paying down debt without a strategy might work eventually, but it’s not the fastest way to become debt-free. Using a strategy like the debt snowball method or debt avalanche method can help speed up your debt payoff while keeping you motivated.

• Debt snowball: The debt snowball method involves paying off your debts according to their balances — from smallest to largest — while making minimum payments on the rest. This method works best for those who need extra motivation and may benefit from a win early on.
• Debt avalanche: The debt avalanche method involves paying off your debt according to interest rates — from highest to lowest. Of course, you still make minimum payments on each balance every month. This method is more efficient than the debt snowball method, but it may take you longer to pay off that first balance.

Choose a strategy that works for you, and stick with it. The better you can stick to a debt payoff plan, the more likely you are to make consistent progress.

10. Earn more money

Cutting costs and negotiating your debts are two great ways to pay off your debt faster, but don’t overlook your ability to earn more money. There could be countless ways to earn more each month, depending on your situation, and even a small boost in your income can expedite the debt payoff process.

Here are a few ways to bring in a little extra cash:

• Start a side business: With a little extra time, you can sell a product or service outside of your full-time job. For example, you could walk dogs, sell handmade jewelry, or be a virtual assistant.
• Work a gig job: You don’t have to start a business to make extra cash. There are plenty of companies — like Uber, Shipt, or Rover — that let you work whenever you want.
• Get a roommate: Have an extra room in your house or apartment? If you’re willing to share your home, you can easily make an extra several hundred dollars every month. 

11. Use a bonus or tax refund

A surprise bonus or windfall is never a bad thing — but it can be tough to decide what to do with it. Help yourself out by earmarking any future bonuses for debt payoff.

FAQ

How do I pay off debt in collections?

After confirming the debt is yours, decide what a reasonable payment plan looks like. If you aren’t able to pay off the debt in full, propose a plan you can manage. You may be able to negotiate your monthly payment or the total repayment amount. Once you settle on a repayment plan with the debt collector, get it in writing. If you have any issues with a debt collector during the process, you can submit a complaint to the Consumer Financial Protection Bureau.

How do I make extra money to pay off debt?

There are endless ways to make extra money, but what works for you depends on your skills, expertise, and availability. You could start a side hustle selling goods or services, take on a gig role, or rent out a room in your house. Depending on your work situation, you may also be able to ask for a raise.

What debt should I pay off first?

It depends on your goals and motivations. If you’re someone who needs a quick win to stay motivated, use the debt snowball method and pay off the debt with the lowest balance first. If you’re solely focused on paying off your debt as efficiently as possible, use the debt avalanche method. This means paying off the debt with the highest interest rate first.