How to Pay Off Credit Card Debt in 2024

Vault’s Viewpoint

• Consumers can use the debt snowball or debt avalanche method to pay off credit cards.
• A 0% balance transfer card or personal loan can be used for debt consolidation and lower interest costs.
• Address the cause of the credit card debt, reduce spending and increase income.

1. Review Your Balances and Rates

If you want to learn how to pay off credit card debt, first you need to review your balances and rates. Start by logging into your online accounts with each credit card issuer. On a piece of paper or online spreadsheet, write down each issuer’s name, total balance, and the Annual Percentage Rate (APR) on one line. Or use a budgeting app to help you figure out your total debt.

Once you’ve written down the balances and APRs, calculate the total amount of credit card debt you have. While it may be difficult to see, knowing where you’re at can help you create a plan.

2. Choose a Strategy

The best way to pay off credit card debt is to have a strategy for how you plan to tackle the debt. Two frequently used debt payoff strategies are the debt snowball and the debt avalanche methods.

Under both options, you pay the minimum amount on all of your cards. Where these differ is where to allocate additional payments. The snowball method suggests throwing extra funds toward the smallest balance you have. The logic here is to get a win and build motivation into the process.

The avalanche method suggests throwing extra funds toward the balance with the highest APR. This approach is the most cost-effective, reducing the amount of credit card interest you pay.

In each option, once the first loan is paid off, then depending on your approach you move to the next smallest balance or the next highest APR. Choose a strategy that will keep you motivated.

3. Address the Cause

The numbers don’t tell the whole story when you look at how much you owe in credit card debt. It doesn’t address the “why.” To pay off credit card debt and stay out of debt in the future, evaluate the “why” behind your credit card debt—without judgment. You can’t change what happened, but you can use this information to help you move forward.

If you know you’re in credit card debt trying to make ends meet, it’s likely you have insufficient income. If you’re spending to keep up with certain lifestyles or creature comforts, the cause might be overspending.

Sometimes, it may just be bad luck like an unexpected hospitalization or costly home or car repair. Figuring out the “why” can help you figure out the “how.” In other words, each situation requires something different, such as earning more income and getting support or reducing extra expenses.

4. Cut Spending

Credit card debt can be particularly painful as they may come with high APRs, especially if you don’t have excellent credit. This can make it tough to claw your way out of debt. Cutting your spending down can help you free up some money to put toward your credit card debt.

Take a hard look at your expenses and where you can cut back. Sometimes, this may mean cutting out completely—such as subscriptions you don’t use that often. In other cases, it may mean reducing the frequency—so if you go out for lunch three days a week, consider going down to once a week. It’s tough to cut back, but this temporary shift can get you closer to paying off debt faster.

“One way to keep your credit card open and active while repaying credit card debt is to only use your credit card for fixed costs, like insurance premiums, subscription renewals, etc. These costs don’t fluctuate so you won’t have the temptation or ability to spend more.”

— Melanie Lockert

5. Grow Your Income

To combat your growing credit card interest, focus on growing your income. Boosting your available income can help you put more money toward your credit card debt, reducing interest costs and your payoff timeline.

Start by seeing if it’s possible to work overtime at your current job. If you feel it’s the right time and you have the data to show for it, ask for a raise. Another option is to change jobs and start working for a new company that offers a higher salary.

Selling old items, freelancing, and participating in the gig economy can also provide opportunities to grow your income.

6. Make Higher Monthly Payments

The single best way to pay off credit card debt is to do something simple, but not easy: make higher monthly payments. Using steps four and five above, the goal is to increase the money available to tackle your credit card debt swiftly. Minimum payments keep you in a holding pattern and can cost you in money and time.

For example, if you owe $2,500 on a credit card with a 20% APR and have a monthly payment of $100, it would take 33 months or close to three years to pay off the balance. You’d also pay $770.47 in interest.

Let’s say you can reduce your spending and boost your income by a modest $200. If you make a $300 monthly payment, you’d pay off the balance in 10 months and pay $234.85 in interest. You’d reduce your timeline and interest costs by more than half.

7. Ask Your Credit Card Company for a Lower Rate

Credit cards typically come with high APRs, which is why credit card debt is so costly. To help with this issue, call your credit card company and ask for a lower rate. You can typically find the phone number on your credit card. If the company rejects your request, then nothing changes and you’re still in the same situation. If they agree, one phone call can help save you money. Beware of scams that might promise to do this for you.

8. Apply for a 0% Balance Transfer Card

If you want to learn how to pay off credit card debt quickly, a 0% balance transfer card allows you to transfer your balance to this card which has a 0% APR for a limited amount of time.

This can help you get ahead, without having interest get in the way as much. While this is a useful option, there are some caveats. Only consumers with good credit typically qualify. And the 0% intro APR period may be between 6 to 21 months. To maximize the benefits, the goal is to pay off the credit card balance within that period. If not, the APR will go up after this period. Factor in that most balance transfer cards also charge a 3% to 5% fee as well.

9. Consider Debt Consolidation

If you can’t qualify for a 0% balance transfer card, another option is to find other ways to consolidate your credit card debt. One option is to get a personal loan for debt consolidation and use that to pay down your credit card balances. If you go this route, go back to step number three. Make sure you’ve addressed the cause before taking on another loan to pay off your credit card balances.

Check out multiple personal loan lenders. Generally, you can get prequalified to check out potential rates with no impact on your credit score.

10. Work With a Credit Counselor

If you’ve found yourself in this situation more than once and need guidance, consider working with a nonprofit credit counselor for free or at a low cost. You can check out the National Foundation for Credit Counseling (NFCC) as a resource. Counselors can help you review your finances and come up with a plan to pay off your debt.