How to Pay Off Credit Card Debt

Quick Answer

You can pay off credit card debt by choosing a debt payoff strategy, such as the debt avalanche or snowball method, a balance transfer credit card or a debt consolidation loan.

Woman planning how to pay off credit card debt.

Using credit cards regularly can be a great way to build your credit history and take advantage of rewards and benefits along the way. But overspending and unexpected financial challenges can result in a mountain of credit card debt. On average, U.S. consumers have $6,365 in credit card debt as of the second quarter of 2023, according to Experian data.

You can start paying off your credit card debt by tallying up how much you owe and listing the balance and interest rate for each card. Once you have an idea of the amount you're dealing with, consider trying one of the strategies below to pay down your credit card debt.

1. Debt Snowball Method

The debt snowball approach is an accelerated payoff strategy that can save you both time and money. To get started, make the minimum payment on all of your credit cards. Then, if you can put additional money toward your debt each month, apply it to the card with the lowest balance.

Once you've paid off that card, add the amount you were putting toward it to the minimum payment on the card with the next-lowest balance. You'll keep doing this with each card, creating a snowball effect that could help you shave time off your repayment plan and save hundreds or even thousands of dollars on interest.

The debt snowball approach is best for people who struggle to stay motivated and need quick wins early on in the process.

2. Debt Avalanche Method

Like the debt snowball strategy, the debt avalanche method has you focus on knocking out accounts one by one. The key difference is the avalanche method targets the balances with the highest interest rates first.

Compared with the debt snowball method, the debt avalanche method may not give you early wins. For example, if the card with the highest annual percentage rate (APR) also has a high balance, it can take a long time before you pay off the first credit card. But it could help you save more money by eliminating your most expensive debts first.

3. Balance Transfer Credit Card

If your credit is in good shape, a balance transfer credit card could be a good fit. These cards typically offer an introductory 0% APR for a set period of time—typically 12 to 21 months, depending on the card—during which you can pay down your debt interest-free.

There's typically an upfront balance transfer fee of 3% to 5% of the transfer amount, which is added to your new balance, but the interest savings can still be worth it.

If you have multiple balances, consolidating them with a balance transfer can also simplify your monthly payments. Keep in mind, though, that there's no guarantee you'll get a high enough credit limit on the new card to cover the amount you want to pay off, and maxing out the balance transfer card could result in your credit score going down, at least temporarily, until you can pay down the debt and reduce your credit utilization.

4. Debt Consolidation Loan

A debt consolidation loan is a personal loan you use to pay off credit card debt. Unlike credit cards, personal loans have a set repayment schedule and fixed monthly payments. Debt consolidation loans can help you secure a lower interest rate and simplify your repayment process by replacing multiple monthly payments with just one.

Personal loans have lower interest rates than credit cards on average, but your rate will depend on your credit score and other factors. If your credit is fair or poor, the rate you qualify for may be too high to make it worth it. Fortunately, many lenders allow you to get prequalified and review rate offers before you apply, which involves a soft credit check that doesn't hurt your credit score.

If you're considering a personal loan to pay off debt, make sure the new monthly payment fits within your budget. If it's too high, it may be difficult to keep up, and a missed payment could hurt your credit. You also need to commit to not running up balances on those cards again—otherwise, you could end up in worse shape than when you took out the loan. Finally, try to avoid lenders that charge an origination fee.

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5. Borrow Money From Family

If you have parents or other family members who can help, consider asking for a short-term loan or assistance with monthly payments. Because borrowing from loved ones can complicate a relationship, make sure to create an official loan agreement and draw up terms you can both agree on.

Then, make it a goal to pay back the loan on time or even early to maintain a good relationship.

6. Cut Back on Discretionary Spending

At first glance, you may not be sure where you can cut back in your budget. But with a deeper dive, you may be able to find some opportunities. Start with your recurring bills. For example, if you have multiple streaming services but don't use one very often, consider cutting it temporarily until you've paid off your debt.

Also, take a look at your car insurance premiums and shop around to see if you can get the same coverage with another insurance company for less.

In addition to those regular bills, understand how you spend your money every day. If you tend to go out for lunch during the week instead of bringing something from home, making that small change can free up some cash flow. You don't necessarily need to change your lifestyle permanently, but making small temporary changes now can put you in a better financial position in the future.

7. Debt Management Plan

If your credit is in bad shape or you're struggling to keep up with payments, a debt management plan may be an option to consider. A debt management plan is a repayment plan you can enter into with help from a reputable credit counseling agency.

A credit counselor will notify your creditors that you're using a debt management plan and will typically try to negotiate lower interest rates and monthly payments. Debt management plans typically take three to five years, depending on how much you owe and your ability to pay. Your card issuers may choose to close your accounts, which could hurt your credit, but it can be better than debt settlement or bankruptcy.

Debt management plans aren't expensive, either, but expect to pay a modest upfront and ongoing monthly fee throughout the plan's term.

Frequently Asked Questions

  • Depending on how deep of a hole you're in, it could take anywhere from a few months to several years. As you evaluate your current debt and budget, you can use a credit card payoff calculator or a debt payoff app to get a good estimate of how long it'll take you to eliminate your balances.

  • There's no single best way to pay off credit cards that works for everyone. The right option for you may depend on your credit score, current debt load, income and expenses and other financial factors.

    As a result, it's important to take the time to research and compare each strategy to determine which one is the right one for you.

  • In general, it's best to avoid closing credit cards because of how the action can impact your credit score. Canceling a card will reduce your available credit, which could increase your credit utilization rate—an important factor in your credit score.

    Additionally, while the positive information from the account will remain on your credit reports for 10 years, it won't contribute any new positive information, which can hinder your efforts to increase your score.

    That said, if you've had significant trouble with overspending and a paid-off credit card would create the risk of falling back into debt, the benefits of closing the card could outweigh the drawbacks.

Take the First Step

Regardless of how much you owe, the task of paying off your credit card debt can feel daunting. But the sooner you take the first step toward your goal, the easier it will be and the faster you'll achieve it.

Keep in mind, too, that your strategy may change over time as your financial situation changes. Be willing to evaluate your plan regularly and make adjustments as needed. Paying off credit card debt can take months or even years, but the effort is well worth it. Throughout the process, monitor your credit regularly to track your progress.

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