How to Pay Off Debt Faster – Wells Fargo (2024)

FAQs

How can I accelerate my debt payoff? ›

Consider the snowball method of paying off debt.

This involves starting with your smallest balance first, paying that off and then rolling that same payment towards the next smallest balance as you work your way up to the largest balance. This method can help you build momentum as each balance is paid off.

Our personal loans require no prepayment penalty. You are welcome to pay off the loan at any time or pay more than the amount due. Any payment made greater than the amount due will be applied first to any outstanding interest or fees and then to your principal balance.

The "snowball method," simply put, means paying off the smallest of all your loans as quickly as possible. Once that debt is paid, you take the money you were putting toward that payment and roll it onto the next-smallest debt owed. Ideally, this process would continue until all accounts are paid off.

Pay more than your minimum balance

To positively impact your debt, it's a good idea to pay more than the minimum payment requirements. If you find that you are financially able to do so, paying more off each month could mean that you pay off your debts faster, and you'll pay less interest.

Credit card refinancing can help you pay off $5,000 in credit card debt much faster because a personal loan comes with a predetermined end date. You can even look into fast personal loans if you're in need of money as soon as possible. Debt consolidation loans allow you to combine multiple debts into one loan.

Make debt payments beyond the minimum.

Making more than your required minimum payment can help you pay off debts more quickly and save money in interest charges. Earmark unanticipated funds, such as your tax return or a bonus, for debt payments.

If you pay $200 extra a month towards principal, you can cut your loan term by more than 8 years and reduce the interest paid by more than $44,000. Another way to pay down your mortgage in less time is to make half-monthly payments every 2 weeks, instead of 1 full monthly payment.

Throwing in an extra $500 or $1,000 every month won't necessarily help you pay off your mortgage more quickly. Unless you specify that the additional money you're paying is meant to be applied to your principal balance, the lender may use it to pay down interest for the next scheduled payment.

Does Wells Fargo let you go negative? ›

Other fees may apply, and it is possible for the account to have a negative balance. Please see the Wells Fargo Consumer Account Fee and Information Schedule and Deposit Account Agreement for details. 5. Available balance is the most current record we have about the funds that are available for your use or withdrawal.

"This means that for most, the fastest way to pay off debt is to dramatically reduce spending, stick to spending only on necessities, and focus all excess income on your debt." Selling your car, cutting down restaurant expenses and adding income from a side hustle are all possible ways to improve your cash flow.

It will take 47 months to pay off $20,000 with payments of $600 per month, assuming the average credit card APR of around 18%. The time it takes to repay a balance depends on how often you make payments, how big your payments are and what the interest rate charged by the lender is.

Running up $50,000 in credit card debt is not impossible. About two million Americans do it every year. Paying off that bill?

How to wipe credit card debt? ›

Outside of bankruptcy or debt settlement, there are really no other ways to completely wipe away credit card debt without paying. Making minimum payments and slowly chipping away at the balance is the norm for most people in debt, and that may be the best option in many situations.

According to Experian, average total consumer household debt in 2023 is $104,215. That's up 11% from 2020, when average total consumer debt was $92,727.

Making extra payments or picking up a side job are just two of several different ways you can pay off a personal loan more quickly. You could save hundreds — if not thousands — of dollars' worth of interest over the life of a personal loan, especially if you're stuck with a bad credit personal loan rate.

Make one extra mortgage payment each year

The most budget-friendly way to do this is to pay 1/12 extra each month. For example, by paying $975 each month on a $900 mortgage payment, you'll have paid the equivalent of an extra payment by the end of the year.

The two most popular strategies are to pay off balances with the highest interest rates first or to pay off the lowest balances first. The former will save you more money over the long run, but the latter can help you keep momentum and see progress.