How to get out of credit card debt

Woman using her laptop to learn how to get out credit card debt Woman using her laptop to learn how to get out credit card debt Image:

In a Nutshell

When you're trying to get out of credit card debt, a mix of planning and perseverance can help you reach that goal.

We generally make money when you get a product (like a credit card or loan) through our platform, but we don’t let that cloud our editorial opinions. Learn more about how we keep this compensation from affecting our editorial views.
Advertiser Disclosure

We think it's important for you to understand how we make money. It's pretty simple, actually. The offers for financial products you see on our platform come from companies who pay us. The money we make helps us give you access to free credit scores and reports and helps us create our other great tools and educational materials.

Compensation may factor into how and where products appear on our platform (and in what order). But since we generally make money when you find an offer you like and get, we try to show you offers we think are a good match for you. That's why we provide features like your Approval Odds and savings estimates.

Of course, the offers on our platform don't represent all financial products out there, but our goal is to show you as many great options as we can.

Just as it takes time and determination to climb a mountain, it takes time and determination to conquer a mountain of debt.

But if you’re equipped with the right knowledge and tools, the journey to conquering that mountain can be relatively smooth. Plus, you don’t have to tackle that mountain of debt alone — credit counselors are available to help.

Beverly Harzog, credit card expert and author of “The Debt Escape Plan,” says that in paying off more than $20,000 of her own credit card debt, she learned that it takes persistence, self-discipline and “a darned good budget” to get rid of that financial burden.

Of course, keep in mind that no two attempts to conquer debt are the same. A debt reduction plan that works for one person may not work for another. And unless you stick to your plan, you’ll likely have a tough time chipping away at your debt.

“There is more than one path to success, so it’s important to know that options are always available when a plan doesn’t work as expected,” says Bruce McClary, vice president of public relations and communications at the National Foundation for Credit Counseling, a nonprofit financial counseling organization.

What follows is advice on how to get out of credit card debt. Do keep in mind that this advice won’t guarantee success, but it can help point you in the right direction.


How to get out of credit card debt

1. Evaluate your finances
2. Prioritize your spending
3. Create a budget
4. Free up money
5. Set a strategy
6. Seek help (if you need it)
7. Work on your financial habits

1. Evaluate your finances

Regina Blackwell, a certified budget counselor at Transformance, a nonprofit credit counseling service, says your first step should be to assess your financial situation.

Create a list of everything you owe, including credit card debt and all other monthly bills, she suggests. This review of your overall debt should include the balance and the annual percentage rate (APR) — the price you’re charged to borrow money — for each credit card.

Looking at each card’s APR will help you decide how to approach reducing your debt. In some cases, you might want to tackle higher-interest debt first to save money on interest charges; in other cases, you might want to give yourself a psychological edge by paying off lower-balance cards first.

What's the average APR on a credit card?

Next, compare your debt and expenses with your income. In examining your debt and expenses, you should consider items such as rent or mortgage debt, credit card balances, loan debt and grocery bills.

As for your income, take into account your salary, the interest earned on your savings and anything else that generates money.

2. Prioritize your spending

When mapping out how to get rid of credit card debt, be sure to cover the basics first, says Sean Fox, co-president and CRO of Freedom Financial Network, a financial services company that specializes in debt settlement. Those basics include food, housing and clothing.

Then, Fox says, be sure to pay at least the minimum amount on secured debts. This type of debt is secured by an asset (sometimes referred to as “collateral”) such as a car or home. If you fail to make timely payments on secured debt, you could lose the asset that’s backing the loan, he warns.

Next, tackle your credit card debt. Credit Karma’s Debt Repayment Calculator is a great way to get started on this task and stay on track. Just enter in the balance you owe and the interest rate, then enter your expected monthly payment or desired payoff timeframe to get an idea of how long it will take to tackle that debt.

Also, focus on student loan debt, Fox says. Why? Because the federal government, which backs most student loan debt, has the means to punish you financially if you have defaulted on the repayment of a student loan. For instance, the government can garnish your wages, your tax refunds and your Social Security benefits. If you have a private student loan, the lender can’t go after your wages or Social Security benefits, but they can pursue legal action in court to collect student loan debt.

Consider not using your credit cards while you’re working on cutting your debt. Paying for things with cash or a debit card can ensure that you don’t rack up debt as you’re trying to pay it off, which can be a frustrating and deflating experience.

Most crucially, make sure you’re making the necessary minimum payments at least on all of your outstanding debts.

Balance transfer cards: One way to help pay off debt

Rather than pay interest on your credit card debt, you may be able to transfer high-interest debt to a single credit card with a balance transfer.

Learn how to do a balance transfer in 6 steps

A number of balance transfer cards allow you to pay 0 percent interest on your balance for a set amount of time, so you can pay more money toward your principal and reduce how long it will take to pay off your debt.

A card like the Citi® Diamond Preferred® Card offers 0 percent intro APR for a full 21 months on balance transfers with a $0 annual fee. (After that, the variable APR will be 13.99 to 23.99 percent based upon your creditworthiness.) If you need a lot of time to pay off debt without being charged interest, this may be a good option to consider.

From our partner

Citi® Diamond Preferred® Card

From cardholders in the last year

See Details, Rates & Fees

If you’re looking for a balance transfer card that offers everyday rewards, you might want to consider a card like The Amex EveryDay® Credit Card from American Express. You can earn two points per dollar spent on purchases at U.S. supermarkets (on up to $6,000 per year in purchases, then one point per dollar after that) and it also comes with 0 percent intro APR on balance transfers requested in the first 60 days of account opening for 12 months. (After the 12 months, the variable APR for balance transfers jumps to 14.24 to 24.24 percent.)

From our partner
See Details, Rates & Fees

3. Create a budget

Once you’ve prioritized your debts, it’s time to establish a budget. A budget will help you track your spending and get a better handle on how to shrink your credit card debt.

“Stick to your new budget like glue,” advises Blackwell. Online tools such as Mint and YNAB (You Need a Budget) can be useful in setting a budget and making sure you don’t stray too far from it each month.

Fox says creating a budget will guide your decision about what strategy to use for reducing your credit card debt. “Be honest with yourself about your obligations,” Blackwell adds. (Later, we’ll explain in detail how to pick the right strategy.)

4. Free up money

As you’re adhering to your budget, you might want to investigate ways you can trim expenses and generate more income.

Going without cable TV, kicking your Starbucks habit or canceling your gym membership are just a few ways to trim down your expenses. It’s up to you to decide which luxuries you’re willing to give up and which you simply can’t live without.

If you’re itching for some extra income, give some thought to getting a part-time gig (or “side hustle”) or making money from a hobby, such as designing jewelry. Or perhaps you can volunteer for paid overtime at your full-time job.

“Just make sure you can handle the extra workload, both physically and mentally,” says Blackwell. “Never put your primary source of income at risk.”

And — though it may be tempting — remember to steer that extra income toward your credit card debt, not toward a fancy gadget or trip to Hawaii.

5. Set a strategy

Strategies for debt reduction come in three varieties: the avalanche method, the snowball method and the blizzard method.

The avalanche method

As explained by Fox, the avalanche method involves paying off the balances with the highest interest rates first. The goal is to erase your debt as quickly and efficiently as possible.

Here’s how it works: Make minimum payments on each of your balances except the one with the highest APR. For the card account with the highest APR, pay the minimum plus any extra you can afford.

“Repeat this process every month until that debt has been paid off,” Fox says. “Then, keep paying the same monthly total, but take every dollar you were using to pay off the highest-interest debt and put that toward paying off the debt with the second-highest interest rate.”

By aggressively paying down your highest interest balances first, you may save hundreds or even thousands on interest charges in the long run. If saving money is your top priority, stick to this strategy until all your credit card debt is gone.

The snowball method

With the snowball method, you pay off the card with the smallest balance first and work up from there, Fox explains. As with the avalanche method, you always make the minimum payments on all your accounts, but then you put any remaining money toward the card with the smallest balance.

After the balance on that card is wiped out, put any extra cash toward the card that now has the smallest balance. This method can help you build the confidence and positive repayment habits you need to eventually conquer all your debt.

The blizzard method

The third strategy is known as the blizzard method. Harzog says this combines paying off the smallest balance first (snowball) and then paying off the highest-interest balance (avalanche).

“The avalanche saves the most money, but some folks prefer a quick win with the snowball method,” Harzog explains. “The blizzard combines both — you get the emotional boost and then you can save money by using the avalanche.”

6. Seek help (if you need it)

Do you still feel overwhelmed? Then it might be time to seek a credit counseling agency, whose experts can help put you on the right track. A credit counselor will work with you to help improve your financial situation, offering tools and resources to help you gain control over your money.

The Federal Trade Commission suggests finding a credit counseling agency that offers in-person services. Ask friends and relatives for suggestions on which agencies are reputable; your bank is another potential resource.

Once you’ve done your preliminary homework, double-check whether the agencies you’re considering are trustworthy by contacting the attorney general’s office in your state or by reaching out to your local consumer protection agency.

7. Work on your financial habits

If you don’t alter the behavior that got you into credit card debt in the first place, you might slip back into debt again in the future.

Fox stresses the importance of differentiating between “wants” and “needs.” Do you need food and housing? Definitely. Do you need to pay your bills and set up an emergency fund? Most likely. Fox says these “needs” should take precedence over “wants.”

He also stresses the need to stick to the budget you’ve created. If you’re not keeping close track of your income and spending, you may wind up in debt all over again.

“Staying out of debt isn’t a big mystery,” Blackwell adds. “Account for your money. Live within your means. Don’t spend what you don’t have. After becoming debt-free, apply the lessons you’ve learned and work toward the establishment of healthy financial habits.”


Bottom line

Getting out of credit card debt usually doesn’t happen immediately. If it took you a while to rack up the debt, it may take you a while to eliminate it.

“The most important thing to keep in mind is consistency in making payments on time every month,” Blackwell says.

“Hopefully, once your credit cards are fully paid off, you’ll swear never to go back to the behaviors that led to being in debt.”


Editorial Note: The opinions you read here come from our editorial team. While compensation may affect which companies we write about and products we review, our marketing partners don't review, approve or endorse our editorial content. Our content is accurate (to the best of our knowledge) when we initially post it, but we don't guarantee the accuracy or completeness of the information provided. You can visit the company's website to get complete details about a product. See an error in an article? Use this form to report it to our editorial team. For questions about your Credit Karma account, please submit a help request to our support team.