How To Pay Off Your Credit Card Debt

March 14, 2024 Debt Relief
How To Pay Off Your Credit Card Debt

It's a fact of life: racking up credit card debt is much easier to do than paying it off and once you start dealing with interest, it can seem nearly impossible.

Dealing with debt is always overwhelming, but if you're ready to take the steps to pay off your credit card debt for you, then read on to learn how to tackle it.

Debt And Your Credit

Debt isn't just an annoying problem that pops up every time you check your credit card balance and realize how high it is -- it has a real impact on your credit.

Credit card debt is a type of revolving debt, a type of debt in which you can carry a balance from month to month. You can borrow as much as you want up to the credit limit and interest will be applied to any unpaid balance once it's past the due date.

Even if your balance carries over month-to-month, you must still make at least a minimum payment on time. Your lender will report any late payments to the credit bureaus (Experian, Equifax, and TransUnion), which damages your credit and can stay on your credit report for up to seven years.

Late payments are particularly damaging because your credit score -- specifically your FICO score -- is made up of five factors:

  • Payment history: 35%
  • Credit utilization: 30%
  • Credit age: 15%
  • New credit: 10%
  • Types of credit: 10%

As you can tell, the biggest factor in your credit score is your payment history. The second most important factor, credit utilization, can make or break your score depending on how much credit you have available. The less credit you use -- ideally 30% or less -- the better.

However, if you have maxed out your credit cards, then your credit utilization will be high and negatively impact your credit. If you really want to pay down your balances, you'll have to rethink the way you use them once you are debt-free.

How To Pay Off Credit Card Debt

Looking to get started? Here are some steps you can take to get started:

Know Your Budget

Keep track of your finances. Every dollar should be accounted for so you know exactly how much you have left to pay off your debt.

Lower Your Bills

Lower your monthly bills by cutting corners wherever you can. Any saved amount can go towards paying off your debt.

Find A Source Of Extra Income

Earning some extra income -- even if it's just a weekly gig -- can go a long way when it comes to paying off credit card debt.

Ask Your Credit Card Company To Lower Your Interest

While this may not always work, it's worth asking your credit card company to lower the interest rates on your credit cards. Even if your interest is lowered by a few percentage points, it can save you hundreds in interest annually -- which you can put towards paying off credit card debt.

Ask For A Debt Reduction

You may not be able to get your credit card company to forgive all of your debt, but you might be able to get partial forgiveness. Explaining your situation to your credit card company and offering to pay part of the balance right away may help you get a reduced payment or a payment plan.

The Debt Avalanche

We know it can be difficult to pay off your credit card debt at once (especially if you have multiple cards), so we recommend paying it off in multiple manageable payments.

One popular way to pay off your credit cards is the debt avalanche method. This entails ordering your credit card debts from the highest interest rate to the lowest and making minimum payments on all of your cards with any extra income going towards the card with the highest interest. If you only have one card, make the biggest payment you can until it's paid off.

Once that card is paid off, you'll work on the card with the next highest interest, while repeating this process until all the cards are paid off. It takes a while to gain momentum, but eventually, your debts will disappear much more quickly.

If you can make more than one payment each month, you might end up paying less interest since many credit card companies use an average daily balance to calculate interest. Lowering the average daily balance lowers the interest charged.

The Debt Snowball

The debt snowball method takes your debts and orders them from the lowest balance to the highest while making minimum payments on all of your cards except for the one with the lowest balance, which you will pay off with extra income.

After that debt is paid off, continue the same process with the next smallest debt until all the debts are fully paid.

Using this method lets you see progress much more quickly, which is good motivation to keep up the payments. It's ideal if you can't qualify for a balance transfer credit card or a debt consolidation personal loan for outstanding debt on multiple cards. And if you have bad credit, you can still find debt consolidation loans.

Additionally, the debt snowball method gives you the opportunity to improve your credit more quickly by lowering credit utilization on each individual credit cards and reducing accounts with outstanding balances much faster.

However, the debt snowball does come with a downside: you may end up paying more in interest over time than compared to the avalanche method. What you end up choosing depends on whether you want faster results (debt snowball) or save more money overall (debt avalanche).

The Balance Transfer

If you have a good or excellent FICO® score and you believe that you could pay off your debt within a year, then a balance transfer card might be right for you.

Balance transfer cards allow you to save money on interest by transferring your high-interest balance to a card with low or no interest. This interest rate will last for a set period of time -- usually 12 to 18th months. After this period is over, you will be charged a much higher interest rate if your debt is not fully paid off.

Balance transfer cards usually come with a balance transfer fee, but you can still find one without it.

Debt Consolidation Personal Loan

Taking out a personal loan can help you pay off consolidated credit card debt in full. It's easier to get a personal loan when you have good credit, but personal loans for fair or bad credit exist -- although with much higher interest rates and potentially unfavorable terms.

Personal loans can be found through a variety of lenders, such as banks, credit unions, and online marketplaces.

Using a personal loan responsibly has multiple benefits -- aside from paying off your debt:

  • Your credit may improve since a personal loan is a type of installment loan and the balance versus credit limit ratio doesn't negatively impact your way revolving credit does. Paying off your debt with an installment loan can improve your score since it adds a new type of credit to your credit mix.
  • Using a personal loan to pay off multiple credit cards makes it easier to manage your payments by reducing the number of payments you have to track.
  • If you qualify for a low interest rate, then using a personal loan can save you hundreds or thousands on interest.

Once you have paid off your credit card debt, keep them open (unless there are annual fees you don't want to continue paying) to help your credit utilization stay low.

If you're worried about overspending and winding up in debt again, you can hide the numbers or shred them.

Debt Settlement

Debt settlement allows you to negotiate with your creditor to reduce your debt and settle for a partial payment instead of the full balance.

This works for individuals who are past-due on their credit card payments and can't make a one-time lump sum payment to their creditors.

Creditors will be more likely to agree to debt settlement if you have gone through a hardship such as unemployment, divorce, or medical issues. Most of the time creditors will take what they can get if they know that they will probably never be paid back.

You can settle your debts on your own or hire a reputable debt settlement service to do the negotiations with creditors for you. A debt settlement company make a lump-sum payment to your creditors while you make a set monthly payment to the company

If you settle your debt successfully, you will usually end up paying 50% or less of the original debt; however, you may have to pay taxes on the forgiven debt if it exceeds a certain amount.   Debt settlement shouldn't be your first option, as it can cause serious damage to your credit. You will still have delinquent debts (plus accrued interest) and get calls from creditors. Additionally, you will have to pay up to 25% in fees (if you work with a company) and there is no guarantee that you will be successful.

Debt Management Program

A debt management program connects you with a credit counseling company that will handle your unsecured debt (credit cards and medical bills) and potentially help you get lower interest rates and fees.

Debt management plans may reduce your interest rates by half and help you receive a longer repayment term. Your dedicated counselor will set up a repayment and education plan for you while the debt management program will pay your creditors so you stay current on your payments. Your credit score has the potential to improve during this program, but if you miss a payment, you can damage it instead.

Home Equity Loan

If you are a homeowner and have equity in your house, you can borrow against the value of your home through one of these methods:

  • Home equity loan: You receive all your funds at once and repay it with a fixed interest rate over a set period of time.
  • Home equity line of credit: You can borrow as much as you need up to a specific credit limit.
  • Cash-out refinance: You refinance your first mortgage with a new mortgage that has a higher amount and keep the difference.

These methods of borrowing have the lowest interest rates for homeowners but they are also risky since you can lose your home if you default on the loan.


Bankruptcy should be your last resort. While it can help you get a fresh start, it's also devastating to your credit.

Chapter 7 bankruptcy completely discharges all debts (except for student loans) by liquidating your assets, such as investments, valuables, a car with equity, and more.

Chapter 13 bankruptcy lets you keep these assets while repaying some of the debt, although there is no guarantee your debt will be resolved.

Need more information on how to deal with your finances? Turn to our experts here.

What are some ways to pay off credit card debt?

How does credit card debt consolidation work?

Credit card consolidation combines your credit card debt into one lump sum and allows you to make one monthly payment with a lower interest rate.

What are some disadvantages of debt relief?

  • Debt settlement has high fees that the company charges after they settle your debt.
  • You must save enough to pay your debt relief company while staying on top of your bills and debts to avoid late payments.
  • Creditors can still sue you during the debt relief process.
  • Your credit report might state that your debt was settled, which raises a red flag for future creditors and make them wary of lending to you.
  • Any forgiven debt (if it's over $600 and less than your initial debt) is considered income by the IRS and you must pay taxes on it unless you can prove you are unable to.

About The Author

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Bryan Huynh

Product Tester & Writer

Bryan Huynh, a committed Product Tester and Writer, ensures that you are well-informed, guiding you in discovering and comparing top-rated financial services, including personal loans, business loans, credit repair, and tax relief.