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Debt Management

How to pay off credit card debt: 3 best strategies

If your credit card debt has become problematic, here are three effective ways you can pay it off


Tackling credit card debt requires a strategy. Whichever one you choose, make sure to stick to it.

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Credit card debt creeps up on you quickly. With some of the highest interest rates across all forms of credit, it accumulates fast and can be detrimental to your credit score and financial well-being.

If you realize you’ve gotten in over your head in credit card debt, it’s time to build a strategy to eliminate it. Read on to learn about three effective ways to pay off credit card debt and get your financial life back on track.

Best ways to pay off credit card debt

See related: How to pay off credit card debt video

Why it’s important to reduce your credit card debt

Debt, in and of itself, isn’t always a bad thing. Certain low-interest debt can be an investment that will increase in value and generate income in the long term. Student loans and mortgages are great examples of such debt.

However, that’s usually not the case with credit cards.

“It’s important to reduce credit card debt … because credit card interest is compounded daily and can cause your financial growth to remain stagnant,” explains Dino Selita, president at The Debt Relief Company. “Credit cards are only be meant to be used as a short-term vehicle for borrowing against your cash flow. As a lending product, they will cost more in interest than any other financial product.”

Consider the following scenario: You have $800 in credit card debt on a card with an APR of 18%. You make a decision to pay off this card and stop making purchases on it. However, you only make monthly minimum payments of $25. It would take you 44 months to pay off the balance and you’d spend almost $300 in interest.

Moreover, your credit score can take a hit if you carry high credit card balances. Credit utilization is the second most important factor of your FICO score, and if you use over 30% of your credit line, it will likely hurt your credit. Additionally, maxed out credit cards can be a red flag to creditors and lenders, who may see them as a sign you’re in financial trouble.

If you have found yourself struggling with credit card debt and are worried that it’s impacting your credit, don’t panic – there’s a way out. Pick one of the strategies that have helped many people pay off credit card debt.

Avalanche method

The avalanche strategy is a popular way to eliminate credit card debt. It focuses on paying off credit cards with the highest APR first in order to save as much as you can on interest.

“So, if you have one credit card with a 15% interest rate and another with an 18% interest rate, you would pay off the debt accumulated on the 18% credit card first,” explains Freya Kuka, founder of the personal finance blog Collecting Cents. “This saves you money in the long run by lowering how much you are wasting on multiple expensive interest payments. This method works well for disciplined people who want to be debt-free with the most effective strategy.”

Make sure you’re still making minimum payments on your lower interest credit cards as well to avoid late fees and damage to your credit. Then, when you’re done paying off the card with the highest interest, move on to the second-highest APR and repeat until you’re fully rid of credit card debt.

Snowball method

Paying off credit card debt can be mentally exhausting. You may feel like you’re spending a big chunk of your income trying to eliminate it, yet all of your accounts are still showing a balance.

If you’re worried this might make you lose motivation to go on, look into the snowball method. It works by the same principle as the avalanche method, but instead of focusing on high-interest credit card debt, you concentrate on the cards with the lowest balances.

“My husband and I used the snowball method to get completely out of debt, including our mortgage. In all, we have paid off over $260,000 in debt,” said Stacie Heaps, personal and family finance writer at Families for Financial Freedom. “I am a big fan of the snowball method because it gives you quick wins at the beginning that help you get motivated and stay motivated to get out of debt.”

Keep in mind that using this method is likely to save you less on interest compared to the avalanche strategy. Nevertheless, if you know that seeing immediate progress is necessary for you to continue, the snowball method might be an excellent option.

Debt consolidation

The idea behind debt consolidation is combining high-interest balances and converting them into low-interest debt, such as a personal loan or another credit card. There are a couple of ways to do it.

See related: Guide to Tally: Consolidate card payments to beat credit card debt

Balance transfer credit card

Balance transfer cards allow you to transfer a high-interest credit card balance to a new card with a temporary 0% APR. The no-interest period typically lasts between 12 and 18 months.

If you pay off the balance during that period, a balance transfer card can be an amazing deal. You won’t just lower the interest – you’ll eliminate interest charges for the length of the introductory period.

However, if you don’t finish paying off the debt by the end of that period, the card’s regular APR will kick in, and it may be higher than your current interest rate. To avoid losing money, only transfer the amount you know you’ll be able to pay off in time.

See related: What is a balance transfer and how does it work?

Note that balance transfer cards are typically available to consumers with good and excellent credit. If you know your credit needs some work, you might want to choose a different method of reducing debt.

Debt consolidation loan

Another option for those with good credit is a personal loan. When you use this method, you take out a loan with an interest rate lower than that of your current debt. Once you apply it to your credit card balances, you’re left with a single fixed monthly payment to take care of.

See related: Consolidation loan vs. balance transfer vs. DIY payment plan

This makes a personal loan not only a smart way to pay less in interest but also a convenient one. It’s easier to keep track of one loan than a few credit cards. Plus, having to make one payment a month instead of many can help you alleviate some financial stress.

While a longer-term personal loan can reduce how much you pay a month, aim to pay off the loan as soon as you can. Longer repayment terms may lead to paying more in interest over time even if your new interest rate is lower.

Final thoughts

Credit card debt can be quick to accumulate and tough to get out of. Don’t let it bring you down: Pick a strategy that you think you can stick with, and keep reducing your credit card balances. With enough discipline and patience, you’ll finally start seeing zeros on your credit card statements.

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.

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