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- Rachel Covert, 37, from Massachusetts, works part time as a financial coach
- He went viral after sharing his hack to pay off credit card debt
- Covert suggests ditching your credit card and starting making lots of payments
A financial expert who retired at the age of 36 has lifted the lid on a simple but effective hack to pay off credit card debt fast.
Rachel Covert, 37, of Massachusetts, quit her corporate job last year and now works as a part-time money coach, teaching professionals how to build wealth through automation and investing.
The former vice president of fashion brands is known as @rachel_talksmoney on TikTok, where she shares helping people “put their finances together.”
Covert went viral after sharing his top tip for paying down debt faster, saying it’s highly effective “credit companies definitely don’t want you to know” about it.
“Credit card debt is really frustrating and really hard to pay off and one of the reasons is because it’s growing every day,” he explains. ’ So that means every day, the money you owe them is growing.
“And it’s not just a little bit of interest on what you’ve paid on credit cards, effectively things you’ve borrowed, it’s also all the interest you already owe them.” So it’s growing really fast and it’s really hard to pay off that.’
Covert’s first piece of advice is to stop using your credit card once and for all.
“Number one, get your credit card out of your wallet, remove it from your phone, remove it from Apple Pay, and stop using your credit card completely,” he said.
The money trainer’s second tip is to ‘start making credit card payments a few times a month.’
“You don’t have to pay the full balance multiple times a month,” he notes. “But take the amount you set aside to pay to your credit card, say it’s $200, instead of paying once a month at $200, divide it into four $50 payments and start making payments every Friday into the credit card you owe.”
“The reason this works is because every time you reduce the amount you owe, you are recruiting less and less interest,” he says.
“So if you’re struggling to pay off your credit card debt, this is one of those little things that can make a big difference throughout the life of the loan.”
Covert’s videos have been viewed more than 400,000 times and received nearly 1,500 comments.
“I’ve been doing this for the last 2 years and it’s taking the interest off of it,” wrote one fan.
“Getting rid of your credit card sounds stupid but it really works!” others agree.
‘Like this! what a tip. Keep them coming!!’ someone else added.
Covert elaborates on the multiple payment hack in a more recent video, saying most people incorrectly assume that credit card interest is only charged once a month.
‘That’s not the case. Credit card debt is calculated daily,’ he explained. “They take the debt you already owe from previous days of having a credit card balance and add it to the principal when they tally up your debt each day.” This is called compound interest. Your credit card debt is growing every day.
‘You definitely need to make at least the minimum payments every month, [but] You should aim to make more than the minimum payout,’ he advises.
“And if you can make it in two, three, or four payments in any given month, you’re helping yourself fight that credit card debt by simply reducing the amount of interest you’re accruing each day.”
However, he noted that there was one caveat to his hack.
“I personally don’t believe in paying off your credit card debt until you have at least a small emergency fund,” he says. “That’s because what tends to happen is if you use your credit card as an emergency fund, you’ll pay off a little bit of the debt and then you’ll put it back on the credit card, and you’re back to square one.”
“So having a few thousand dollars in a savings account is like a high-yield savings account that protects you from having to use a credit card and getting out of your credit card debt again.”
