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How to get out of credit card debt: 8 effective steps

It's always important to put yourself in a solid financial position, and one good way to do that is to dig out of credit card debt


This structured, disciplined plan will help you bat down credit card debt and regain financial control.

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A structured, disciplined approach can help you get out of credit card debt whether your balance is $3,000 or $30,000. Follow these eight tips to get out of the red as quickly as possible.

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How to get out of credit card debt

  1. Take stock.
  2. Improve your rates, or consider a balance transfer.
  3. Track your costs.
  4. Create a budget.
  5. Choose your payoff strategy.
  6. Stash your plastic.
  7. Find your motivation and support.
  8. Track your progress.

1. Take stock.

Before you start reducing your credit card debt, know where you stand, says Cate Williams, vice president of financial literacy for Money Management International, a large, national credit counseling firm. “A lot of people will say they’ve got a certain amount of debt — $9,000, let’s say — when in reality, it’s $11,000 or $14,000.” You’ll never hit your target if you don’t know where it is, so be brutally honest with yourself.

Action plan: Write down the debt — and the interest rate — on every card you have.

2. Improve your rates, or consider a balance transfer.

The quickest way to save big on your credit card bills is to negotiate a lower interest rate. If you can shave off even a percentage point or two, you can save hundreds as you pay off your debt. A simple phone call and a polite request may be all it takes. While your credit score will play a large role in whether or not you get a rate cut, it’s not the only factor. Every lender has its own approach to this issue. It never hurts to give it a shot.

You may also consider moving your credit card balance to a new card that offers a 0% introductory APR on balance transfers. Many balance transfer cards offer 0% interest for 12, 15 or even 21 months. This can help you pay off a credit card balance faster. (Be aware that many card issuers charge a fee of 3% to 5% of the transferred balance.)

Just be sure you can pay the balance off during the introductory period, otherwise you’ll be subject to a potentially high regular APR once it ends. And don’t put any new spending on your card until the existing balance has been paid down to zero.

Action plan: Call up each credit card company and request lower interest rates. If you’re successful, write down your new interest rates. If you are interested in lower interest rates, check out the best 0% APR and low interest credit cards.

3. Track your costs.

Write down all your regular, committed expenses (mortgage, utilities, insurance, car payments, minimum credit card payments, phone, gym, cable, etc.), and track other variable expenses such as restaurant meals, entertainment and travel. This will serve as the foundation to your budget.

Action plan: Study up to a year’s worth of credit card bills and bank statements to get an accurate sense of your monthly spending, and keep tracking your expenses with a notebook or financial software.

See related: Debt payoff debate: Pay smallest balance first? Or highest rate?

4. Create a budget.

It’s time to take an ax to some of those expenses. The key is to be realistic: You’ll have to make some sacrifices, but you don’t need to live on bread and water. “Cutting back can be more effective than cutting out,” says Gail Cunningham, former spokeswoman for the National Foundation for Credit Counseling, a leading accrediting agency for credit counseling firms. “It’s hard to adjust your lifestyle too dramatically, and often, little adjustments can add up to big savings.” Cutting out a single pizza dinner each week, ratcheting down your gold-plated cable plan and changing your thermostat by a few degrees can give you the jump start you need. Be sure to give yourself a bit of breathing room in your budget in case an unexpected expense pops up.

Action plan: Write down three ways you can cut back immediately, and cancel or downgrade some services. Divide your monthly discretionary budget into weekly allotments so you’ll have a better handle on whether you’re staying on track.

5. Choose your payoff strategy.

There are two common credit card payoff strategies. The first is to plow all your extra cash into the highest-interest card while paying the minimums on the others — which is the fastest way, overall, to lower your debt. Once the first card is paid off, you have even more extra cash, and should apply it to the card with the next-highest rate, and so on, creating a debt payoff snowball effect. A second strategy is to pay off your card with the lowest balance first while continuing to pay the minimums on the others. Though this is not the most cost-effective way to banish your debt, it’s the fastest way to eliminate debt on a single card, and it can be a psychological boost to eliminate a bill for good.

Action Plan: Choose your strategy, then rank cards in the order you’ll pay them off.

See related: Poll shows only 7% of U.S. debtors expect to die in debt

6. Stash your plastic.

In 2000, MIT researchers took two groups of students and dangled scarce Boston Celtic tickets in front of them. One group was required to pay cash; the other was asked to pay by credit card. The credit card crowd was willing to pay more than twice as much, their research found. “I’ve seen people save 20 percent when they begin paying with cash,” Cunningham says. “They become more contemplative of their purchases.”

Action plan: Store your credit cards where you won’t have easy access to them — but don’t cancel them. Plan to pay in cash whenever possible. 

7. Find your motivation and support.

Create concrete goals to stay focused. Maybe getting rid of debt will allow you to save for a down payment on a house, go on a dream vacation or stop worrying about every bill that hits your mailbox. Find a community to swap stories, successes, and challenges. A forum where you can feel supported — where you can say “I’m so tired of trying to save money.” There are hundreds of personal finance bloggers and forums where you pull up a virtual chair.

Action plan: Write down your goals and keep them in your wallet or purse. If you get tempted to overspend, take a look at them to remind yourself of the bigger picture.

See related: Netflix, ’80s pop and coffee: How consumers get in the mood to pay bills

8. Track your progress.

While you don’t want to spend every day fretting over your bills, keep an eye on your spending. “Revisit your progress every few months,” recommends Williams. “You don’t want this to consume your life. It took you awhile to get into debt, and it’s going to take you awhile to get out of it.”

Action plan: Put reminders in your calendar to check up on your finances. Keep the page with your starting balances, and compare them to check your progress.

Updated: March 4, 2020

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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.

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