Borrow Credit Cards

How To Pay Off Credit Card Debt

Hattie Burgher  |  May 23, 2024

It's tempting to only pay the minimum your credit card requires, but here's how to escape the black hole of credit card debt in no time.

So you spent a little too much on take-out this month — or maybe you went a little overboard at that sale at T.J. Maxx, or you decided to treat yourself to a spectacular summer vacation. Whatever it was that made you whip out your card and spend more than you should have, the problem remains: You now have credit card debt.

Although it’s always tempting to make only the minimum payments your credit card requires, it’s unfortunately a terrible strategy. that’s not really the best strategy. Why?

2 Reasons to Pay More Than the Minimum

Reason No. 1: Credit card interest is the worst. The average credit card interest rate is north of 15%, and adding that your your debt month after month adds up so quickly. Bottom line: You won’t be chipping away at your debt if you’re only making the minimum payments.

Reason No. 2: Your credit card balance may be dragging down your credit score. Your debt load compared to credit available is a big factor when it comes to calculating your credit score. Dumping that debt so that your credit utilization is lower can only mean good things for your credit.

Here’s what you can do to escape the black hole of credit card debt:

Avalanche vs. Snowball Methods

The first step to getting out of credit card debt is to tackle one card at a time. You can do this one of two ways: The avalanche method or the snowball method.

Avalanche method: With the avalanche method, start by checkiing to see which card has the highest interest rate, and focus on paying that debt first, while also making minimum payments on your other cards. This is the most cost-effective way to get out of debt, since you’re getting rid of your highest-interest rate debt first, which is more expensive than any other debt you owe. 

Snowball method: With the snowball method, you focus on paying off the smallest balance first while also continuing to make minimum payments on your other cards. Although this is not the most cost-effective way to get out of debt, it is the quickest way to see progress on “closing out” your credit card debt. The thinking here is that the small victories you’ll experience when paying off each debt can do wonders for your motivation to keep chipping away until all your debt is settled. 

Consider a Balance Transfer

If you need some breathing room so you can pay down your debt without having to worry about interest piling up for a few months, you should consider a balance transfer.

A balance transfer lets you move credit card debt from one card to another. The goal is that the card receiving the balance would have a lower interest rate — ideally 0% — and you’d pay off the balance before that no-interest period ends (which is usually anywhere from six to 18 months). Ideally you would pay off your debt balance before you lose that low interest rate, which will get you out of debt faster because your payments are no longer also going toward interest — every penny is headed straight to reducing your debt.

Get Coached On A Budget That Actually Works For You 

The harsh reality is: You’re going to need to reassess your spending habits to free up some money to put toward your debts. Many of us are spending so much more than we realize on small things like streaming services, impulse buys, takeout, gym memberships we rarely use, and so much more. And not only is it costing us in the here and now, it’s potentially damaging our long-term health and our ability to save for retirement. 

This is a big reason why assessing your spending is one of the first exercises we do via our FinanceFixx budgeting course.  Members get a chance to actually see where every dollar is going, and then reassess where they actually want their dollars to go. Once you get a handle on that, then you can figure out exactly which budgeting method works best for you and your needs.  You may decide to track everything in an app or spreadsheet, or you may want to kick it old school with a journal. The point is that whatever money you start to free up, put that toward your debts. (And FinanceFixx participants save an average of $1,500 over the course of 8 weeks!) 

We know that with some budgeting skills (and encouragement!) under your belt, your credit card debt will be erased in no time.

Join us on your financial journey. Subscribe to the HerMoney newsletter to tap into a judgement-free zone where we’re discussing EVERYTHING about money, life, and making it all work. 

Editor’s note: We maintain a strict editorial policy and a judgment-free zone for our community, and we also strive to remain transparent in everything we do. Posts may contain references and links to products from our partners. Learn more about how we make money.

Next Article: