How to pay off credit card debt (2024)

Up to your eyeballs in credit card debt? You need a plan — immediately.

There are plenty of reasons to prioritize paying off credit card debt. The longer you live with it, the more it’s liable to increase, and the harsher toll it’ll take on your mental health.

Many rewards credit cards charge higher-than-average interest rates if you become too deep in debt — the interest charges alone can account for thousands of dollars per year. Plus, if you’re using more than 30% of your available credit, your credit score can drop.

Let’s take a look at the most common strategies for paying off credit card debt fast — and discuss a few bonus tactics that are helpful for any situation.

The debt snowball method

The debt snowball method is simple: If you’ve got balances spread across multiple credit cards, continue to make the minimum payment on all cards — and throw every spare penny at the credit card with the lowest balance.

This method is considered by many as the best way to pay off credit card debt because it encourages you to systematically eliminate balances as fast as possible. By always focusing on the credit card that you can most quickly pay off, you’ll watch as your collection of balances shrinks one by one. It’s sort of a gamified way of paying off your debt.

Each time you pay off a balance, that’s one fewer minimum payment you’ll have to make each month. This frees up more money to channel toward your next credit card payment. As you continue to eliminate debt, more and more of your money will “snowball” toward the credit card you’re currently paying off.

As an example, let’s say you’ve got three credit cards:

• One that charges 28% APR with a balance of $8,000.
• One that charges 22% APR with a balance of $3,000.
• One that charges 19% APR with a balance of $4,000.

With the snowball method, you’ll make the minimum payment on the $8,000 balance and the $4,000 balance, and as large of a payment as you can spare toward the $3,000 balance. Once that card is paid off, you’ll do the same for the $4,000 balance — but now you’ve got one less monthly minimum payment draining your income, so your payment should be even bigger.

The debt avalanche method

The debt avalanche method is likely to save you the most money — though the process may not be as satisfying as the snowball method. It focuses on paying down the credit card with the highest interest rate first.

With the debt avalanche method, you’ll continue to pay the minimum payment on all your cards. Any money you have left over will go toward the credit card with the highest APR, as that’s the card that is flushing the most money down the drain in the form of interest.

Let’s say you’ve got the same three credit cards as in the previous example. The debt avalanche method requires you to make the minimum payment on your $3,000 balance and $4,000 balance. You’ll make the largest possible monthly payment on the $8,000 balance (the card with the highest interest rate) until it’s gone. Then, you’ll focus on the $3,000 balance.

Debt consolidation

A debt consolidation loan can help you save money on interest if you have debt across multiple credit cards.

In short, you’ll open a loan in the amount of your credit card debt. The bank will pay off your credit cards, and then you’ll repay the bank in monthly installments. This rolls your multiple credit card payments into a single payment that is usually much lower (and often with interest rates significantly lower than your credit cards). Your credit score may even go up, as it’ll sharply lower your credit utilization by opening up your amount of available credit.

There’s just one problem: You have to be approved for the debt consolidation loan. If your credit score is low due to your high credit card balances, a bank may not want to offer you a loan. And even if your credit score isn’t totally grim, your debt-to-income ratio could scare lenders away — or perhaps prevent them from extending to you an amount that will cover all your debts.

If you’re in a position to be approved for a debt consolidation loan, consider doing it. You can put the money you save each month in interest payments toward the loan’s principal to pay it off exponentially faster.

Balance transfer credit cards

Balance transfer credit cards can be a valuable tool for those trying to lower interest payments. You can combine multiple credit card balances onto a single card, which can help you to reduce your monthly bill.

Several credit cards offer a 0% intro APR period after account opening. During this window, 100% of your monthly credit card payment will go toward your balance. For example, the Citi Double Cash® Card offers a 0% intro APR on balance transfers for 18 months. After that, the standard variable APR will be 19.24% - 29.24%, based on creditworthiness. An intro balance transfer fee of either $5 or 3%, whichever is greater, applies to transfers completed within the first 4 months of account opening. After that, the fee will be 5% of each transfer (minimum $5) That’s a nice long breather from sky-high interest payments.

Unfortunately, most balance transfer credit cards require at least a good credit score to be approved, similar to a debt consolidation loan. If your credit score is low, you may not be approved for a credit card. And even if you are approved, you may not receive a credit limit that can accommodate a meaningful amount of your high-interest debt.

For example, if you’ve got $15,000 in credit card debt and open a balance transfer credit card with a credit line of $2,000, the benefit of opening that card is negligible.

Other tips for paying off credit card debt

There’s no simple strategy for how to pay off credit card debt that doesn’t require hard work (unless you count bankruptcy, which is reserved for those who can’t pay off their debt for the foreseeable future and comes with extremely harsh repercussions). If you’re in serious debt, it’s going to take a plan of attack and consistent financial discipline to overcome.

Here are five other tactics you can use to pay down your credit card debt:

Get a second job

It’s true that credit card interest rates can be downright predatory. Some cards charge more than 30% APR — virtually guaranteeing that you’ll struggle to climb out of any debt hole you fall into. But you agreed to the terms when you opened the card, and you’ve got to make the credit card issuer whole.

It could be well worth the effort to get a second job to erase your debt as quickly as possible. Remember that it’s temporary — just to get your payments under control. With a second job, you’ll be surprised at how quickly you can shake off debt that otherwise seemed insurmountable.

Adhere to a strict budget

Whether you’re in debt as a result of poor (or nonexistent) budgeting, or emergency bills have landed you in this situation, you can start repairing your finances by creating a proper budget.

Note your monthly income and list every seemingly insignificant expense that depletes it. Taking a thorough inventory of your spending could lead to an awakening; the innocuous $6 transactions you make at Starbucks here and there could amount to hundreds of dollars before you know it.

Explore debt reduction tools

There are a handful of debt payoff apps that help you to get a grip on your debt. They won’t lower your debt by themselves, of course, but they can show you easy wins and provide guidance.

For example, Rocket Money can search through your credit card transactions and display your spending habits in a very understandable way. It’ll show you unwanted or duplicate subscription services and cancel them for you. It can even sniff out bills that it thinks can be lowered and negotiate them on your behalf.

Call the credit card issuer

It’s worth contacting your creditors to ask them for a lower interest rate due to financial hardship. They may temporarily lower your APR, which could save you hundreds of dollars depending on your situation.

This strategy works best if you’ve never missed a payment and still have an amicable relationship with the banks.

Consider a debt management plan

A debt management plan (DMP) is a financial rip cord option that helps you to consolidate your debt when you can’t get approved for a debt consolidation loan. It comes with perks like:

• Professional help from a debt management counselor
• Stopping debt collectors from calling you
• Rolling your numerous monthly credit card payments into a single, more reasonable bill

This is an extreme option that you shouldn’t rush into. When you enter into a DMP, all credit cards that you roll into the plan will be canceled. You could also pay fees to the credit counseling agency, though the money you save will likely far outweigh those fees.