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How to get out of credit card debt

Practical and simple steps you can take to pay off your credit card balance for good.

If you’re struggling to deal with credit card debt, following a debt relief plan can help get you back on the path to financial freedom. If you need a little more help than that, there are free services you can access for personalized assistance and advice.

How to deal with your credit card debt

Unfortunately, there is no single method of dealing with credit card debt. Instead, there are a number of strategies to get out from under your debt, piece-by-piece. These steps are designed to form a path to financial freedom and even following them one at a time can help.

Decrease the overall amount you owe

While paying off your credit card debt is your ultimate goal, there’s some nuance in making sure you don’t pay more than necessary during the process.

  1. Calculate the total amount of money you owe. It’s time to face the hard truth. This process might be painful, but it’s necessary and short-lived. Get all your account balances together and make a list. Include your debt amounts, the interest you’re paying on each of those amounts and any other charges. As part of this process, take a look at our credit card repayment calculator to see just how long it will take to pay off your debt.
  2. Create a budget. Start with your monthly income and figure out your essential monthly expenses. Expenses should include only the bare necessities such as bills, groceries, gas and other living expenses you need. After establishing your income and expenses, create a monthly schedule for repaying your debts. Work out how much you can pay off each month, but be practical and leave a margin for emergencies. To easily track your budget, use a budgeting app.
  3. Avoid making new purchases. To get rid of your debt, you have to stop adding to it. Stop spending and start using that money to pay down your existing balance. Remember that your ultimate goal is to be debt free. You can treat yourself again once you’ve achieved that.
  4. Set up automated payments. Using your budgeted monthly payment amount, set up automated payments to make sure you actually pay what you plan to. Set up the payments to come out of your bank account the day after you get paid this is a sure-fire way to stay committed to your budget. Pay more if you think you can swing it, but don’t overextend yourself.
  5. Make weekly payments. Even though your statement comes monthly, credit card interest is actually calculated on a daily basis. This means that increasing the frequency of your payments can help to reduce the total interest you pay over time.
  6. Cancel cards you don’t use. This tip will help save on annual fees and other charges that you may be paying on your cards. Also, this will help reduce the temptation to spend more money.

Lower your interest rate

If you’re digging your way out of credit card debt, it’s likely you’re experiencing the full effects of your credit card’s interest rate. Here are a few options to reduce that interest rate and get out of debt faster.

  1. Contact your credit card provider. If you’re feeling overwhelmed by your debt, it might be worthwhile to appeal to your credit card provider for a renegotiation of terms. Creditors are sometimes willing to allow a temporary postponement of payments or a slightly more favorable interest rate. Generally, they would rather give you a discount than risk you defaulting on your debt.
  2. Apply for a debt consolidation loan. A debt consolidation loan allows you to consolidate your debt into one monthly payment, often at a reduced interest rate. A consolidation loan can be a great way to save money by paying less in interest, and it can make paying back your debts more manageable. Debt consolidation loans are a good option if you plan to pay back your unsecured debt over several years.

Look into a balance transfer

Similar to debt consolidation, a balance transfer allows you to move a credit card balance from your current credit card to a new one.

Balance transfers can buy you time to repay your debt without incurring any more interest. This is because balance transfer credit cards offer low or 0% interest on your transferred debt for a promotional period of time, sometimes for as long as 24 months. This might be exactly what you need to get rid of that debt more quickly, not to mention what you’ll save on interest fees that add hundreds of dollars to your debt every year.Back to top

Debt consolidation options

Compare debt consolidation loans

Name Product Filter Values APR Min. Credit Score Loan Amount
Credible personal loans
2.49% to 35.99%
Fair to excellent credit
$600 to $100,000
Get personalized rates in minutes and then choose an offer from a selection of top online lenders.
Best Egg personal loans
5.99% to 35.99%
600
$2,000 to $50,000
A prime online lending platform with multiple repayment methods.
Upstart personal loans
3.50% to 35.99%
580 or 600 depending on state of residence
$1,000 to $50,000
This service looks beyond your credit score to get you a competitive-rate personal loan.
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Compare up to 4 providers

Transfer your debts to a 0% balance transfer card

%
Name Product Amount saved Balance transfer APR Balance transfer fee Minimum Credit Score Filter values
Luxury Card Mastercard® Titanium Card™
0% intro for the first 15 billing cycles (then 14.99% variable)
$5 or 3% of the transaction, whichever is greater
670
Enjoy unique excursions, privileged access to exclusive events and insider opportunities.
Luxury Card Mastercard® Black Card™
0% intro for the first 15 billing cycles (then 14.99% variable)
$5 or 3% of the transaction, whichever is greater
670
Receive an annual $100 air travel credit toward flight-related purchases including airline tickets, baggage fees, upgrades and more.
Luxury Card Mastercard® Gold Card™
0% intro for the first 15 billing cycles (then 14.99% variable)
$5 or 3% of the transaction, whichever is greater
670
Earn 2% point value when redeemed for airfare or cash back through the Luxury rewards program.
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Compare up to 4 providers

How to pay off multiple credit cards

If you need to pay off credit card debt across multiple cards, there are a few additional considerations to take into account for paying off your debt successfully.

  • Consolidate your debts onto one card. This follows on from step 3, where you can consider a balance transfer to help with your debt consolidation. As well as giving you the opportunity to save money with the most competitive interest rates for a promotional period, you’ll also only have to pay off one account. It could also help you save on additional charges, such as credit card annual fees.
  • Pay off the card with the highest interest rate first. You’ll save the most money by paying off the account with the highest interest rate first, followed by the account with the next highest interest rate and so on. You’ll still have to make minimum payments on your other cards during this time.
credit-card-advise
  • Pay off the card with the lowest balance first. For some people, paying off the card with the lowest balance first is more motivating. This strategy will reduce the number of outstanding accounts sooner and cuts down on interest charges in the process. Of course, you’ll also need to make minimum payments on your other cards at the same time.

What to do if you’re overwhelmed

If you’re in over your head and need some help gaining ground, here are some additional tips for turning things around:

  1. Call your issuer. If you’re experiencing trouble repaying your debts, your issuer is often more than willing to help you figure out a plan to get you back on track. Alternate payment plans or adjusted rates are just a few of the outcomes that can let you start paying.
  2. Seek professional help. Gaining control over your debts can be very difficult, especially at the beginning. It can be helpful to get professional advice and there are even a range of free services for debt management that you can consider.
  3. Use your savings. Since your savings account could never offer an interest rate as high as the one you’re probably paying on your credit card, it follows that you should be using your savings to pay off your credit card debts. Use the cash under your bed, that rainy-day fund and every penny you can find to pay off those debts, because they’ll just swell up with interest if you don’t. And once they’re paid off, you’ll have more money you can put towards your savings.
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Quick tips to help clear credit card debt

After selecting an overall debt-reduction strategy, see if you can stack the odds even more in your favor. Consider these tactics:

Make weekly payments when possible

If you receive a weekly or biweekly paycheck, consider using this method. Take the monthly payment you want to put toward your debt, and divide it by four. Pay this amount each week. For example, if your monthly payment is $400, your weekly payment is $100.

The logic behind this is that most months have four weeks, while some have five. For the months that have five weeks, you are actually skipping one potential weekly payment when you pay $400 instead. With weekly payments, you can pay slightly more without even realizing it.

As you’ll see in the table below, paying weekly helps you put $400 more toward your debt over a year.

PaymentsMonthlyWeekly
Monthly debt$400$100
Total yearly payments$4,800$5,200

Negotiate with creditors

Most of the time, you can negotiate your credit card terms, interest rates and payments. But this typically depends on the credit card company and your personal situation.

The most important factor here is timing. You’ll have more success if your credit score is good and you’re not behind on your payments. If your bank won’t budge, you can say you’re planning to move to another bank for better terms.

But if you’re already late on your payments, or you know you won’t be able to make your payments on time, it’s typically best to be honest about your situation.

Seek help

If you feel like you’re drowning in debt, seek help. Friends and family should be your first choice, but you can also reach out to professionals who can help you out. You may be surprised how far asking can get you.

Credit Card Stress

In a survey conducted by Finder.com in July 2020, credit card debt was reported to be the highest form of debt stress for Americans who admitted to being in debt. Approximately 32.14% of Americans claimed credit card debt gives them the most stress when compared to student loans, mortgage, medical debt, auto and personal loans.

Types of debtMost stressful types of debt according to those with debt
Credit card debt32.14%
Student loans21.39%
Mortgage21.15%
Medical debt12.43%
Auto loans8.48%
Personal loans4.42%

Source: https://www.finder.com/personal-loans/debt-consolidation-loans#american-debt-stress-statistics

When looking at age demographics, stress for other debts fluctuated as participants aged going up and down while credit card debt stress only increased with age. Around 46% of those aged 65 and older noted being the most stressed about credit card debt.

Age rangeMortgageAuto loansStudent loansMedical debtPersonal loansCredit card debt
18-24 year olds12.35%7.41%41.98%6.17%1.23%30.86%
25-34 year olds17.93%7.59%35.17%13.79%5.52%20.00%
35-44 year olds23.16%9.60%20.34%11.30%6.21%29.38%
45-54 year olds20.86%6.75%17.18%15.95%4.91%34.36%
55-64 year olds23.65%8.78%14.86%14.19%4.05%34.46%
65+ year olds25.20%10.57%6.50%9.76%2.44%45.53%
More women appeared to be stressed about credit card debt than men at 33.77% and 30.13% respectively.

How to avoid future credit card debt after getting clear

You’ve cleared your debt, or you’re in the process of doing so. That’s great news. Going forward, build the financial habits to keep you out of debt.

  • Identify why you first fell into debt. Was it overspending, high interest rates or a combination of the two? Try working with a budget or get a card with a lower interest rate.
  • Pay off your balance in full every month.
    By paying in full each billing cycle, you won’t pay interest. This is one of the key habits to build as you finish your college career and move into the next phase of adulthood.
  • Move your statement due date. By making sure your statement due date is just after payday, you’ll definitely have the funds to repay your credit card bill on time.
  • Keep your balance low.
    Most experts recommend keeping your credit card balance under 30% of your total credit limit at all times. This is a great idea because it keeps you from accumulating too much debt or exceeding your credit limit.
  • Stick to a budget.
    Create and stick to a budget. Also, consider reducing your credit limit — call your provider to do this — or leaving your card at home when you don’t need it.
  • Set up autopay.
    By setting up automatic payments, you’ll never miss a bill due date — excellent news for your credit score. Or consider setting up reminders to pay your bill in your calendar or on your phone.
  • Be very careful with balance transfers and cash advances.
    Outside of an intro-APR period, balance transfers start collecting interest immediately. The same goes for cash advances.

Bottom line

Credit card debt can often seem overwhelming, but by setting a budget, planning out your strategy and/or getting a debt consolidation loan or balance transfer card if you need one, you can get rid of credit card debt and make lasting, sustainable changes in your financial life. However, if after assessing your situation you still find yourself in a position where you don’t think you’ll be able to make meaningful progress toward paying off your debt, it may be time to consider debt relief as a viable option.

Frequently asked questions

If I get a balance transfer cards, will I get rewards on the transfer?
No. Policies vary from lender to lender, but most balance transfer cards with rewards will only give you points on new purchases.

Can a balance transfer hurt my credit score?
Yes. The provider will do what’s called a “hard pull” when you apply, which will cause an initial dip in your credit score. However, if you continue to make on-time payments your credit score will improve.

Should I get a debt consolidation loan or a balance transfer card?
That depends on your financial situation. If you want to consolidate your debt buy don’t know what option to choose, shop around. Compare rates for both options and figure out what your monthly payment would be and how long it would take to pay off your debt. Balance transfer cards often have an interest-free period, but when that ends the interest rate could be much higher than what you’d pay with a consolidation personal loan.Back to top

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