How to Pay Off Credit Card Debt

The best way to pay off credit card debt is to review your balance on various cards and their APR. Then, tighten your budget to free up additional funds to pay off more of your monthly debt.

Credit card debt is sneaky. If you only accumulate a few hundred dollars per month in debt, you might not notice it much until it reaches a few thousand dollars. Then, the interest rates on the debt start to impact your ability to pay it off and you begin to wonder how you’ll get yourself out of the situation. Learn the best ways to pay off credit card debt on your way to greater financial stability. Whether you have minimal credit card debt or it feels insurmountable, you have options and can work your way out of debt steadily each month.

How to Pay Off Credit Card Debt: 10 Ways

The first step in paying off credit card debt is to understand it. Create a spreadsheet or write down the balance on all credit cards and their corresponding interest rates. That way you know what you owe and where that debt is growing the most each month due to high interest rates. With a greater understanding of your current financial situation, follow these strategies to overcome credit card debt.

1. Select One Debt at a Time

A challenge consumers face with debt is that it feels overwhelming. The best way to make your debt feel more manageable is to select one debt to pay off at a time. You should continue to make minimum payments on other debts to avoid late payments that impact your credit. But from there, you’ll select one debt to start paying off. You have options for picking the first debt to pay off.

• Snowball method: To gain momentum, you select the credit card with the smallest balance. The smallest balance will be the fastest to pay off, which can provide a sense of accomplishment.
• Avalanche method: To avoid continuing to accumulate large amounts of interest, you can start with the debt with the highest interest rate. Most Redditors recommend paying down your high-interest debt first unless your lower-interest credit cards have a high credit utilization ratio that impacts your credit score and makes new lines of credit impossible.

2. Pay More than the Minimum

Review your credit card statements to learn more about the minimum payments required. Then, go to your budget to see how much you can add to those monthly payments. One Redditor said the best way to pay off credit card debt is to learn how to budget. The more you pay, the less interest you’ll accumulate next month. When you only pay the minimum, paying off your debt takes many months or years. Ideally, you’re focusing on paying more than the minimum on one credit card to pay that debt first.

3. Open a Balance Transfer Credit Card

Use a balance transfer credit card to consolidate your debt with 0% interest rates for the first 15-24 months. While you’ll pay 3-5% of the balance you transfer, you’ll save hundreds or thousands of dollars on interest over the next several months as you pay down your debt. The setback to this method is that you’ll be susceptible to the interest rates your new credit card sets once the intro offer expires. That interest rate could be higher than what you have with your existing cards.

4. Consolidate the Debt with a Loan

You can consolidate your debt with a personal loan. That way, you pay a lower interest rate and can make one convenient payment each month instead of multiple payments if you have multiple credit cards with debt. 

If you have adequate equity in your home, a home-equity loan could offer lower interest rates because it is a secured loan, meaning if you default on the loan, the bank takes your home. Closing costs for a home-equity loan, though, could be higher than those for a personal loan.

5. Reduce Spending

To have more money in your budget to pay off your credit cards, you should look for ways to reduce your spending. Negotiate contracts, such as cable, internet or cellphone bills. Eliminate unnecessary subscriptions, such as food subscriptions, where you could get the goods for less by visiting a grocery store.

Once you’ve eliminated an expense category, dedicate those funds immediately to your debt payoff strategy. That way, you don’t reallocate the funds to other expenses that are not essential.

6. Increase Your Income

The best way to pay off credit card debt quickly is to increase your income to have extra funds for your payments. Put those funds toward your debt payments whenever you get a bonus or a raise. Don’t wait because, with time, that new income level will start to feel normal and you’ll increase your spending in other places to enjoy that newfound income.

Consider whether a side gig might be right for you. Look for opportunities to take surveys or earn gift cards to pay for regular monthly expenses so you can put more of your income toward your debt payments.

7. Ask Family for Help

If you have a family member who can loan you interest-free money, this is the best way to get rid of credit debt quickly and stop accumulating interest immediately. That will put your money to work for you more effectively. Set up automatic transfers to your family member who lent you the money. Failing to build a repayment plan could damage your relationships.

8. Work with a Debt Management Company

When you’re in so deep that other options aren’t working for you, working with a debt management company might help. A credit counseling agency can help negotiate for lower rates and payments to help you get your debt under control in 3-5 years in many cases. The risk of this method is that it often involves closing your accounts, which will harm your credit. But it won’t do as much harm as bankruptcy if you don’t get things under control.

9. Pay in Cash

Getting credit card spending in check can be challenging for some people. Using cash can help you see exactly what you’re spending and make the experience feel more personal and real. Handing over a $20 bill feels different from blindly scanning a credit card for a purchase. Plus, going to an ATM or bank for more cash mid-month might be enough of a deterrent to avoid overspending because it makes you think more about whether you need to spend the money. And you won’t be able to accumulate more debt if you pay everything in cash.

10. Don’t Wait

Every month, you only search for how to pay off credit card debt, but you don’t create a plan to pay it off; you accumulate more debt. Don’t wait to start paying more than the minimum on your debt and get your spending in check to avoid future debt.

Get Started Now

The best way to pay off credit card debt is to build a strategy for making additional monthly payments and stick to it. You won’t pay off your debt in one month, but you will get there bit by bit, and that’s what matters. Avoid accumulating new debt by sticking to a budget firmly or adjusting to using cash for everything.

Frequently Asked Questions