How to Pay off Credit Card Debt

We’ve all been there. You find something you love, but you can’t afford it at the moment. So you charge it on your credit card and plan to pay it back eventually. But it happens again. And again. And again, until you find yourself with out-of-control debt.

If you feel overwhelmed, we get it. We hear you. And we’re telling you that it is possible to pay off your credit card debt—without having to perform a miracle.

Wondering how to pay off credit card debt? Look at all your options. From there, you can come up with a plan of attack and make some progress. When you keep at it, you’ll eventually be debt-free.

How to Pay Off Credit Card Debt

The best way to pay off credit card debt? Stop using your cards, make a budget and stick to it. Try to put any extra money towards your debt, if you can.

When your credit card debt piles up, it can be easy to pay just the minimum payments or stop paying completely. Try to avoid this if you can. Only paying minimum payments can make your interest add up. Here’s an example:

Let’s say you owe $6,000 on a credit card with a 15% annual percentage (APR). Your issuer requires 2% of that balance as a minimum payment. If you only pay the $120 minimum payment, you’d have to fork up $9,184 in interest by the time you pay it off.

Don’t fall into this trap. Here are a few strategies that can help you pay off credit card debt.

1. Go in With a Plan

Before you tackle that mountain of debt, you need to know how bad it is. It’s time to collect all the information you need to make a plan. You can use a pen and paper, apps, payoff calculators or spreadsheets to make a budget. Here’s how to get started:

Make a list of all your credit cards
Note the balance, limit, interest rate and minimum payment
Make note of any cards you’re behind on or that have been already sent to collections
Make a list of your regular bills and expenses
Note how much money is left after you subtract all your bills, expenses and minimum debt payments from your monthly income

Once you know where you’re at, you can start planning a budget. While some people cringe at the word, a budget is really just a plan for your money. It’s making sure you’re in control of where it goes instead of trying to figure out where it went after the fact. Sticking to a budget and not continuing to use your cards is the quickest way to pay off credit card debt.

That’ll get you right on track to start a budget. And sure, a budget can sound scary. But it just gives you control of your money. When you stick to a budget and avoid using your cards, you can start whittling away that credit card debt.

2. Pick a Payoff Method

You know you want to pay off your debt. But figuring out how to pay it off quickly is a whole other ballgame. Two that could help— the debt snowball or debt avalanche methods.

Whichever you decide on depends on your financial situation, but you have to stick to the one you choose. Jumping back and forth won’t help, and it gets rid of the momentum you need to build for these plans.

Debt Snowball

The debt snowball method is based on starting with the card with the smallest balance and putting any extra money you can on the payment. In the debt snowball strategy, make the minimum payment on your other credit cards but nothing extra.

Once that smallest card is paid off, you move to the next smallest card, but add the minimum payment from the first card to the next one. For example, if the card you just paid off had a minimum payment of $20 and the next card has a minimum payment of $30, your new “minimum payment” is $50. This payoff strategy gives you the satisfaction of seeing a card balance flip to zero early on in your payoff plan and provides an extra emotional boost motivation wise.

Debt Avalanche

The debt avalanche focuses on paying off the credit card with the highest interest rate first. This strategy is the most efficient way to attack your debt, but it takes discipline to stick with it, especially if the card with the highest interest rate has a large balance. Once you pay off the card with the highest interest rate, move on to the card with the next highest interest rate and continue on just like in the debt snowball method.

4. Consider a Balance Transfer Credit Card

Making extra payments is a great way to pay down debt. Unfortunately, it isn’t always possible. How else can you pay off your credit card debt? It might be time to try a balance transfer card.

Many credit card issuers offer 0% introductory APRs to customers who transfer a balance over to their card from another. That 0% APR will expire eventually—usually within 12 to 15 months, but some last as long as 18 to 21 months. There’s also usually a fee, which can run 2% to 5% of the balance you’re moving on average.

Remember that not all balance transfer offers are equal. Here are some things to look for:

How long the introductory 0% APR lasts for
Whether that APR applies to purchases and not just balance transfers
What the go-to APR on balances transfers and purchases will be after the introductory rate expires
The fee associated with transferring the balance

The best balance transfer credit cards don’t charge retroactive interest, but some 0% APR cards will charge interest on the full balance you transferred if you can’t pay it all down before the offer expires. If you’re ready to compare balance transfer credit cards, we’ve got you covered.

5. Look Into a Loan

Is getting a loan to pay off credit card debt a good choice? Maybe. Going into debt to get out of debt can be tricky. But if you’re serious about not using your credit cards, a loan can help you save hundreds or thousands in interest and help pay off your credit card debt faster.

Personal Loans

Personal loans are installment loans where you agree to make a set monthly payment at a certain interest rate for a specific period of time. A nutshell, when you take out the loan to pay off debt, you get a hard date when the debt will be completely off the books.

For this to work, you have to make the payments on time. You can’t go back to using credit cards when things get tight. Also, remember that interest rates on your loan are affected by your credit score. This means that, depending on your credit score, you may or may not qualify for a lower interest rate than the one you’re already paying.

When you’re looking for a loan, compare the following:

Whether the APR you can qualify for will be lower than the one your credit card(s) are carrying
The length of time you’ll have to repay the loan
If the monthly payment fits into your budget
Whether there are any penalty fees associated with paying the loan back early

Remember: The last thing you want to do after using a personal loan for your credit card debt is to build up those balances up again. Otherwise, you’ll have more debt on your hands than you started with. You might want to hide or cut up your cards if you’re choosing this option.

Debt Consolidation Loan

If your credit card debt is stacked too high, you might want to use a debt consolidation loan. Debt consolidation will lump your debt into one manageable monthly payment that covers the combined balance on all the cards. Consolidating credit card debt is a great way to simplify the process and could even help effectively lower interest rates than if you separately pay each credit card every month.

6. Re-Evaluate Current Expenses

Cutting down on expenses can help you decrease your debt. For example, think of that fancy morning latte is part of your daily routine. Could you use that money towards your cable bill? And what about that monthly gym membership? Do you go often enough to justify the cost?

When you got out spending, it’s like you’re cutting off weights that hold you back from financial freedom. Don’t think of it as depriving yourself of luxuries—think of it as working towards your debt-free future self.

7. Consider a Debt Relief Program

If an aggressive payment schedule sounds overwhelming, we get it. It isn’t for everybody. That’s where other options, such as debt management plans, credit counselors or filing for bankruptcy, come in. Here’s what you need to know:

Bankruptcy can wipe out most debts, but be wary. It has serious effects on your credit, so only use it as a last option.
Think of credit counselors as your personal money management expert. They’ll review your budget and create a plan to pay off your debt.
With a debt management plant, you’ll keep paying your debt. But instead of paying off different credit cards, you’ll make a single payment to a counseling agency.

Pay off Your Debt, Improve Your Credit

You’ve probably noticed that the more your unpaid debt as piled up, the more your credit score has gone down. That’s because your amount of debt does affect your credit score.

It works the other way—if you bring down your debt, your credit score could improve to good credit. As you improve your debt, make sure to monitor your credit through Credit.com. Our free credit report card will monitor your payment history as you work to improve.