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

FAQs

How can I accelerate my debt payoff? ›

Pay off your debt and save on interest by paying more than the minimum every month. The key is to make extra payments consistently so you can pay off your loan more quickly. Some lenders allow you to make an extra payment each month specifying that each extra payment goes toward the principal.

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.

To work toward paying off a large balance, though, consider using the debt avalanche or debt snowball approach. With the debt avalanche method, you'll make the minimum monthly payments on all your credit card accounts and apply any additional payments you can afford to the account with the highest interest rate.

Debt avalanche: Make minimum payments on all but your credit card with the highest interest rate. Send all excess payments to that card account. Once you pay that account off, send all excess payments to your next highest rate. Repeat until all of your debts are paid off.

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.

$5,000 in credit card debt can be quite costly in the long run. That's especially the case if you only make minimum payments each month. However, you don't have to accept decades of credit card debt.

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

To pay off $9,000 in credit card debt within 36 months, you will need to pay $326 per month, assuming an APR of 18%. You would incur $2,735 in interest charges during that time, but you could avoid much of this extra cost and pay off your debt faster by using a 0% APR balance transfer credit card.

How many months does it take to pay off $20,000? ›

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.

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.

That's an alarming amount of overall debt, but how much does the average American have? In 2023, the average American household had $104,215 in total debt.

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 debt snowball method: paying your smallest debts first

Then, pay the minimum amount each month on all debts, but focus the majority of your efforts on that smallest account. Once your smallest debt has been repaid, move on to the next smallest debt and repeat the process.