Geber86 / Getty Images

Debt Management

In credit card debt for the first time? Here’s how to pay it off

A new year doesn't have to mean new debt


If the new year arrived with a new card bill you can’t afford for the first time, fret not. These steps will help you draft a payoff strategy.

The content on this page is accurate as of the posting date; however, some of our partner offers may have expired. Please review our list of best credit cards, or use our CardMatch™ tool to find cards matched to your needs.

Did the new year arrive with a new credit card bill that you can’t quite afford?

If you typically pay off balances, realizing that you suddenly can’t do that is sobering.

“Don’t beat yourself up if this is your first rolling balance,” says Jill Gianola, a certified financial planner and author of “The Young Couple’s Guide to Growing Rich Together.”

Instead, do something that actually will help. “Take a look at why it happened,” she advises. Were you more generous with gifts this year? Did you spend money that you didn’t really have? Or did an unexpected emergency send you over budget?

“It’s time to get a road map to get yourself out of debt,” says Lamar Person, CPFC, assistant manager in counseling for Consumer Education Services Inc., a nonprofit credit counseling agency.

Let the angst motivate you – then let it go. What’s really important is what comes next: Implementing a plan to pay back that balance.

Here’s how to create one.

Steps to paying off your first rolling card balance

  • Draft a spending plan. Create a budget and figure out how much money you can save.
  • Select a payoff strategy. Options may include cutting down on discretionary spending, shopping for better deals on services and/or applying for a balance transfer card.
  • Pick a repayment pace. You want to find a monthly repayment amount that will fit your situation.
  • Stay out of trouble. Identify why you ended up in trouble, stick to a flexible spending plan and don’t forget to reward yourself for your financial discipline.

Draft a spending plan

“Complete a budget,” says Person. “You want to figure out how much money you have you can put toward” payments.

Today, there are abundant free apps that  help you set and maintain your budget on the go. Or go low-tech with a journal, notebook or spreadsheet.

One trick: Don’t throw all your disposable income at the debt, says Person. Instead, make regular deposits to savings, too. That way, when emergencies – or holiday season temptations – arise, you won’t be forced to use credit.

Select a payoff strategy

Don’t wing it with your payoff plan. Chances are that’s the attitude that landed you in debt for the first time.

Here are three options to turbocharge your payoff plan:

1. The two-step option.

“First, use a calculator to figure out how much you think you can pay each month on your debt,” says Gianola. Then, pick a category of discretionary spending and cut that monthly budget in half. Add that money to your monthly payment.

“So, if you tend to spend $300 a month on eating out, and you decide to spend half that much, you can add $150 a month toward paying off your debt,” she says. Put that with whatever money you’ve already earmarked and you can demolish a card balance that much faster.

2. The better deal option.

Shop service plans (such as wireless, cable, satellite and phone), for better deals, says Joe Ridout, consumer services manager for Consumer Action.

Then take what you save on those monthly bills and add it to the amount you’ve already budgeted for that card balance.

When you’re finished paying off the card balance, the rest of those savings is yours to keep.

Don’t beat yourself up if this is your first rolling card balance. Instead, take a look at why it happened.

Pro tip: When you call service providers, ask for the retention department, he says. They often have the juice to green-light a better deal. And if you have lower offers from competitors, that will put you in a stronger position to negotiate.

3. The new card option.

If this is the first time you’ve ever needed to roll a balance, chances are you have pretty good credit. A new balance transfer card with a 0-percent introductory rate could eliminate interest while you pay down that balance.

The trick: Stop using both cards until that balance is gone, says Person. “If you’re incurring debt while you’re paying it off, you’re not really paying it off.”

Two things to look out for if you’re shopping for a balance transfer card:

  • Duration of the introductory period: Make sure you’ll have enough time to pay the debt in full before the promotional rate expires and the card’s regular APR kicks in.
  • Balance transfer fees: Look for a card with no balance transfer fees – typically 3 to 5 percent of the transferred amount. Balance transfer fees can negate the advantage of getting a 0-interest card, especially with a small balance or shorter payoff period, says Person.

Video: What is a balance transfer credit card?

“Make sure you read that fine print and understand what you’re getting into,” he says.

And run the numbers on what you stand to save –’s balance transfer calculator can help. If the interest rate on your current card is good, a 0 percent rate might not make a huge difference in how quickly you can pay off the balance, especially if you’ll have to pay balance transfer fees.

If you’re rolling that first-ever balance on a retail card, however, running some numbers might save you a few dollars. Retail cards have, on average, an APR of 24.99 percent.

One example: If you put $300 a month toward a $1,000 balance at 16.32 percent (as of Jan. 24, 2017, that is the national average APR on new card offers) …

  • It would take four months to zero out that balance.
  • With a 0-percent card, it would take the same four months, and you’d save $31 in interest. But the balance transfer fee of such amount, at a typical 3 percent rate, would be $30.
  • However, if your card has an interest of 24.99 percent, you’d save $18 in interest, including a 3 percent balance transfer fee.

One useful tool:’s payoff calculator. Set a monthly payment and see how long it will take to zero out that card balance. Or pick a target date and see how much you need to pay monthly.

“If your plan is too slow and steady, you may find it difficult to stick to the plan… On the other hand, if your plan is too aggressive, you may give up after a few payments.”

Pick a repayment pace

Just how much should you tighten your belt to pay off that balance and how quickly can you get it done? A lot of that depends on your personal situation.

“I’m kind of for biting the bullet and getting it over with quickly,” says Ridout. But, he admits, it’s a fine line.

“I like something in the middle,” says Gianola. “If your plan is too slow and steady, you may find it difficult to stick to the plan. And, it’s often disheartening so see how little progress you make. On the other hand, if your plan is too aggressive, you may give up after a few payments.”

Instead, opt for a payoff plan that fits your budget, she advises.

Skip taking out new loans, says Ridout. “Quite often that’s going to make a bad situation worse.”

For some financial experts, that also includes a new balance transfer card. “That strategy can backfire,” says Gianola.

Applying for new credit can lower your score, at least temporarily due to the hard inquiry on your report. And for some, having more credit means using more credit – which is exactly what you don’t need if you already have a balance you need to pay.

Additionally, “your goal of paying off your balance will start to slip away if you keep adding to that debt.” So, skip “charging new purchases while you’re making payments,” Gianola says.

Stay out of trouble

Once you’ve wiped out that balance, you want to keep paying off your credit cards in full every month. A couple of tricks to help:

Pinpoint the cause

It’s the first thing you want to look at when you first realize you ended up in trouble: “Why is the balance so high?” says Ridout. Mistakes? Overspending? Emergencies?

“You need to understand how it happened and engineer your budget so it doesn’t happen again,” he says.

Keep using a spending plan

And update that budget throughout the year. Plans change, incomes fluctuate and unexpected emergencies come with price tags. Revisit your spending plan and keep it current.

Celebrate and save

Remember that discretionary spending category that you halved to pay down your card balance? Reward yourself by restoring half of the amount you cut, says Gianola.

And set up direct deposit for the other half – so that it goes straight into your savings account. That growing emergency fund, she says, can help you “avoid carrying a balance in the future.”

See related: 9 ways to organize your finances in the new year, 6 ways NOT to pay off holiday credit card debt

Editorial Disclaimer

The editorial content on this page is based solely on the objective assessment of our writers and is not driven by advertising dollars. It has not been provided or commissioned by the credit card issuers. However, we may receive compensation when you click on links to products from our partners.

What’s up next?

In Debt Management

When a delinquent account threatens employment

If a surprise, forgotten delinquency is noticed by an employer, the best policy is honesty.

See more stories
Credit Card Rate Report
Cash Back

Questions or comments?

Contact us

Editorial corrections policies

Learn more