How to get out of credit card debt: 7 steps

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It can be easy to get into credit card debt, but much harder to get back out.

If you struggle to pay off balances that never seem to go down, you’re not alone. Total card balances hit a record high in 2023, and 49% of cardholders are carrying a balance from month to month, according to a recent Bankrate survey.

Despite this, it’s still possible to reduce your credit card debt. Tackling your balance as soon as possible can lower your overall expenses and get you closer to your financial goals. Here’s how to pay off your credit card debt in seven easy steps.

1. Assess your debt & make a plan

The first step to solving any problem is to acknowledge it fully. To pay off your credit card debt, you’ll need to know how much debt you actually have.

Pull your recent credit card and bank statements. Record each card's balances, interest rates, and required minimum payments. This will help you develop a payoff plan that works best for you.

Next, take some time to review your spending. Identify how much you spend on monthly essentials, like groceries, gas, or housing. The goal is to determine how much extra funds you have in your budget for your card repayment.

Reviewing your spending can help you identify habits contributing to your credit card debt. This financial snapshot lets you start mapping out ways to pay down debt.

The more you owe, the longer the journey to a zero balance may take. You should challenge yourself, but it’s essential to strike a balance so you don’t end up discouraged or burnt out, says money-saving expert Andrea Woroch.

The goal is to make a realistic plan that keeps you positive and focused throughout the process.

2. Cut back on your spending

Once you know how much you owe and how much you can feasibly put toward paying off your debt, it’s time to start lowering your living expenses. Hopefully, tracking your spending helped you uncover some areas to cut back.

“Look for new ways to save money (on bills and purchases) or make money (with a side hustle and cash back apps),” says Woroch. “All the extra cash you save or make can help pay down your balances faster!”

This could include:

• Dining out less and cooking more at home
• Reducing unnecessary subscriptions
• Grocery shopping with a list to avoid impulse purchases
• Comparison shopping before buying
• Taking public transportation
• Cutting back on energy usage
• Prioritizing free or low-cost activities
• Negotiating utility or cable bills

Another easy way to curb spending? Ditch the plastic — at least for a while.

“Don’t touch the plastic for discretionary expenses like clothing, entertainment, coffee, or restaurant expenses,” says Sean Fox, president of debt resolutions at Achieve, a digital personal finance company offering debt consolidation services. “If necessary, cut up credit cards — but don’t close the account — or freeze them, so you must think before spending.”

Stick to cash or a debit card so you don’t spend more than you have.

3. Try to negotiate

While there are no guarantees, you can call and negotiate with your credit card issuer. You may be able to lower interest rates, suspend late fees, or settle outstanding debt for less than what you originally owed.

Why? If credit card debt becomes too high, a borrower could eventually file for bankruptcy and not pay the issuer. Because of that, issuers may be willing to work with you to get back some of their money rather than nothing.

You never know what will happen unless you ask. Letting your issuer know about your repayment plan can give you more leverage in negotiating.

Sometimes, even modest concessions allow enough breathing room to help you pay down your debt. Many issuers want to retain loyal customers and will work in good faith to find a realistic solution.

4. Pay more than the minimum

Paying the minimum amount on your credit cards each month helps avoid late payments and fees — but your balance still accrues interest, even if you don’t make any additional charges.

Most card minimums are either a lower fixed rate or 1%-3% of your card’s balance, whichever is greater. Sometimes, your minimum payment will barely cover the monthly interest charges, and you can fall further into debt.

For example, let’s say you have $6,000 in debt on a credit card with a 20% interest rate. If you just made the minimum payment on your card, it would take you over 24 years to fully pay off your debt, and you will have paid $9,390 in interest alone.

Ideally, you’d pay your balance down in full each month, but paying at least more than the minimum can accelerate your debt reduction. Using the same example, if you made a fixed monthly payment of $200, it would take you only 42 months to pay off your debt, and you’d only pay $2,387 in interest.

That’s why putting as much as possible towards your debt as soon as possible can help you get out of debt faster and save money in the long run.

5. Consider a balance transfer credit card

Balance transfers involve moving your balance from one (or multiple) card to another, typically with a lower interest rate or 0% promotional period. Doing so can save money on interest charges and combine multiple card payments into one.

The best balance transfer credit cards offer a period of 0% for up to 21 months. That means all of your payments will go to directly paying down your balance.

It's important to note that balance transfer cards may charge a transfer fee, a percentage of the total transfer amount. But this fee can still be worth it if the new card's rate is significantly lower than yours.

Planning to pay down your debt before the introductory period expires is a good idea. Many balance transfer cards come with high variable rates following the promotional period.

6. Consider a personal loan

Personal loans give you the capital to cover your credit card debt. Although you’re substituting one debt for another, personal loans often have lower interest rates. You can also select a loan term based on how much you can pay each month.

When you open a personal loan, you’ll receive a lump sum immediately to pay off your credit card balance. You’ll then pay a fixed monthly payment until the personal loan is paid off.

This type of debt consolidation transfers variable credit card interest rates into fixed loan rates, which can help stabilize your monthly payments.

But remember, this option doesn’t eliminate your debt, so you’ll still need the plan to pay it off. It’s also important to avoid racking up more charges on your credit card now that it’s paid off.

7. Use the avalanche or snowball method

If you have multiple debts, you may want to make a more strategic plan to pay them down. There are two primary ways to do so: the snowball method and the avalanche method. The best option for you comes down to your preferences and financial situation.

Avalanche method

With the avalanche method, you focus on paying off your debts based on their interest rates, starting with the highest interest rate first. This method is the most efficient way to pay down debt and minimize interest charges.

Let's say you have three credit cards:

• Card A has a balance of $3,000 with an interest rate of 20%
• Card B has a balance of $5,000 with an interest rate of 15%
• Card C has a balance of $2,000 with an interest rate of 10%

Using the avalanche method, you’d make the minimum payments on all three cards and put

any extra money towards Card A first.

Once Card A is paid off, you move on to Card B. This method continues until all your debts are paid off.

Snowball method

The snowball method isn’t the most cost-effective approach, but it may be easier to stick with.

With this method, you prioritize your debts based on their balances, starting with the smallest balance first.

The idea is to gain momentum by quickly eliminating smaller debts, which can provide a psychological boost and keep you motivated.

Using the same example above, with the snowball method, you’d focus on paying down Card C first while making the minimum payments on all three cards. After Card C is paid off, you’d turn to Card A and so on.

You'll pay more interest with the snowball method than the avalanche method. But the most important thing is to find a repayment strategy that works for you — that you can stick to over the long run.

The bottom line

Paying off your debt requires effort and discipline over months (or even years), depending on how much you owe. But following the tips above can help you regain control of your finances and pay down your debt. Don’t forget to stay positive by tracking your progress and celebrating your wins over time.

Editorial disclaimer: Opinions expressed are author's alone, not those of any bank, credit card issuer, or other entity. This content has not been reviewed, approved, or otherwise endorsed by any of the entities included in the post.