How to Pay Off Credit Card Debt When You’re Short on Cash

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Making a dent in your credit card debt can feel impossible when you're barely breaking even financially. The truth is, if you have no extra money to put toward your credit card debt each month, you'll likely either need to cut your expenses or add to your income to make progress on your debt. With some strategizing and focused effort, however, it's possible to make changes that add some flexibility to your budget so you can start to pay off your credit cards.

An important step in getting rid of credit card debt is to stop adding to your debt total, or at least to reduce your reliance on credit. This means not using your cards for the time being, or using them less, which could require a wholesale reevaluation of your budget. That may be just what you need to view your finances with fresh eyes. Here's how to make your debt-free goal a reality.

Create a Budget and Stick to It

A budget can give you helpful structure when you're ready to change your spending habits and eliminate credit card debt. It won't do you much good unless you follow the guidelines you've set for yourself, though.

If you don't already have a budget, creating one can provide clarity where you previously might have had none. Your first step in making a budget will be to view your expenses for the previous month (or several months) to see if you can spot any patterns. One look at your expenses might show you that it's time to cut back on services you no longer use, or that it's possible to streamline grocery shopping trips so you spend less on meals.

Once you understand your expenses, it's time to pick a budgeting strategy that appeals to you. If you're organized and love a good spreadsheet, a zero-based budget that you track closely might motivate you the most. On the other hand, if budgeting every penny that comes in and goes out feels unsustainable to you, you could try budgeting using multiple accounts instead. This is a more hands-off approach that has you split your income into various deposit accounts that have their own specific purposes.

In any case, following a spending plan that helps you determine where to allocate your money will be helpful. Experts often recommend the 50/30/20 method, which encourages you to spend 50% or less of after-tax income on essentials such as housing and food, 30% or less on items you want but don't need, and 20% or more on savings goals such as retirement and paying off debt. That may not be realistic right now, but these are guidelines to aim for.

Secure an Additional Source of Income

If you're already on a barebones spending plan, or you'd rather earn more than spend less, look for ways to make more money you can use to pay down debt. For instance, you might sell items you don't want or need anymore, which could secure you a quick infusion of cash. Renting out an extra room, your car or your parking space when you're not using them via platforms like Airbnb, Turo and JustPark, can also be lucrative.

Or make extra money from home by tutoring online, freelancing on the side or user-testing digital products on sites like You can also take on a part-time job, or work at your own pace with a side gig like shopping for groceries on Instacart or delivering food on DoorDash or Postmates. Do the math on how much extra you need to earn in order to start paying down your debt; taking on too much work on top of your current commitments could lead to burnout. Another option is to ask for a raise at work, once you've researched the market in your industry and you're willing to demonstrate how you've brought value to the company.

Consider Nonprofit Credit Counseling and Financial Assistance

There are many ways to get help developing a credit card payoff strategy. With assistance from reputable financial experts, you might be able to identify your best budgeting method, learn about how to negotiate with creditors or apply for economic hardship programs to lower some of your bills.

A good place to start is a nonprofit credit counseling agency. These organizations offer free initial consultations to anyone who needs basic help budgeting or exploring debt reduction options. They can help you view your situation holistically alongside other debt you may have, such as student loans or a mortgage. The counseling agency could also get you on a debt management plan, which is a paid service that aims to reduce your credit card debt. Debt management plans aren't right for everyone, though—more on that later. Find a local credit counselor through a national network like the National Foundation for Credit Counseling.

If you find that paying off debt is hard because you struggle to even pay your monthly bills like rent and utilities, financial assistance is available through local, state and national organizations. For example, 211 is a nationwide service supported by United Way that connects people experiencing financial difficulties with local resources. Call 211 from any phone to be referred to the right help for you, whether that's guidance signing up for federal benefit programs or finding rental assistance. Getting the benefits you deserve can give you the breathing room to cut down on debt that's overwhelming you.

Look for Debt Relief

Whether you work with a credit counselor or on your own, you have several options for eliminating debt, known as debt relief:

  • Apply for a debt consolidation loan. Debt consolidation allows you to convert multiple debts, commonly several credit card balances, into a single loan. That can make repayment simpler, and can help you budget since you'll be required to make a fixed payment toward the loan each month. A debt consolidation loan is best for those with good or excellent credit scores who can qualify for the lowest available interest rates.
  • Use a balance transfer credit card. Another option for those with good credit is to apply for a credit card that offers an introductory 0% APR period on transferred balances, known as a balance transfer card. You'll need to make a plan to pay off your debt before the zero-interest period ends and the new (higher) interest rate kicks in, but if you do, you'll potentially save a substantial amount in interest. One caveat: Balance transfer cards often charge a balance transfer fee, which typically comes out to about 3% to 5% of the transferred amount. This will add to your debt load, but with the savings on interest, you're still likely to come out ahead if you keep up with your payments.
  • Opt for the snowball or avalanche methods. You can also take the reins on your own and pay down multiple credit card balances with specific strategies. The most common are the debt snowball and debt avalanche methods. You'll use extra money to pay more than the minimum monthly payment required on one debt until it's gone, then apply the monthly payment from that debt to the next one. Using the debt snowball, you'll pay off the smallest balances first; you won't save the most in interest, but you'll collect wins faster. Using the debt avalanche, you'll pay off the balances that carry the highest interest rates first.
  • Participate in a debt management plan. Nonprofit credit counselors offer these plans, in which a counselor negotiates with your creditors on your behalf to lower interest rates or fees, or potentially even your monthly payments. You'll make one monthly payment to the credit counseling agency, and the agency will pay your creditors, simplifying your bills. You'll have to close the credit card accounts included in the plan, which can affect your credit scores, and you'll pay a setup fee and monthly fee to participate. Consider it if you aren't concerned about losing access to your credit cards during the process, the fee is manageable for you, and you're unsure whether you'd get debt-free otherwise.

Understand How to Use Credit Responsibly

Once your debt is gone, it's just as important to maintain strong habits to avoid accumulating debt again. You don't need to swear off credit cards entirely, as long as you're committed to using credit responsibly; in fact, regularly making purchases using a credit card and paying them off right away is one of the tried-and-true methods for building a good credit score.

Once you're free of credit card debt, make sure to stick to the budget you created. Once you're ready, and you're confident you can keep your debt under control, you can start using credit cards again. If you do use a card to finance something, make a plan to pay it off within a reasonable amount of time. Credit cards should be a tool that you use intentionally and wisely.

It's also crucial to monitor your credit score and your credit report, which includes the information that contributes to your score. Regularly checking your credit lets you notice any dips to your score, which could potentially be a result of a missed or late bill payment or an increase in your account balance. Understanding the elements that contribute to good credit will reinforce the importance of sticking to those habits.

The Importance of Debt Reduction

Even with little or no extra money to spare, paying off credit card debt is a worthy goal. With less debt, you'll have a better shot at achieving other milestones that matter to you, like buying a house.

Eliminating debt takes hard work, patience and careful strategizing, especially when money is tight. Choose the method that best fits your circumstances and stay positive, knowing that with time and effort debt freedom will come.