How to pay off credit card debt

Imagine if you put the interest you pay toward your credit card debts into a high-yield savings account each month. Think how amazing it would feel to watch your balance grow and know that you're in control of your financial life. 

It could be more than just a daydream if you have a plan to knock out your debt. Let's look at how to pay off credit card debt with realistic, actionable steps.

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How to pay off credit card debt

Paying off credit card debt is a process that typically involves budgeting and managing spending, choosing a debt repayment strategy, and tracking your progress. You may use a DIY approach to pay off credit card debt, or get professional help from a debt expert. Consistency and discipline can be crucial to making any debt repayment option you choose work for you. 

Several factors can influence how you choose to pay off debt, including:

• The amount you owe

• Each credit card's interest rate

• Your budget and what you have available to commit to debt repayment

• Payment history, and whether you're current on all your accounts

If you're interested in how to get out of credit card debt, that's a positive sign. No matter how much you owe or how you got into debt, there's usually a solution that can help you pay it off. 

Step 1: Check your finances

A financial review lets you see where you're starting from on your quest to pay off credit card debt. When you know how much you owe and how much you can afford to pay toward your debt, it's easier to narrow down which debt repayment option is most realistic. You could also avoid chasing the wrong solution, which can set back your debt payoff plans. 

Here are three things to check as you gear up to pay down your debt. 

1. Your credit card debt (and interest)

Do you know how much credit card debt you owe? Or how much you're paying in interest?

If you said no, don't stress. You're not alone. Millions of people with credit card debt have no idea what rates they're paying.

It’s easy to find out. Pull out your most recent statements for each of your credit cards and make a list of:

• Each creditor's name

• The balance for each card

• Minimum payment due for each card

• The actual amount you pay each month

• Each card's annual percentage rate (APR)

This step might be a little painful if you're adding up what you owe for the first time. But it’s necessary if you want to come up with a game plan for paying it all off. 

2. Your credit score

What's a credit score? It’s a three-digit number that lenders rely on to decide how likely it is that you’ll repay your debts. Credit scores are based on your past experience with credit.

In the eyes of lenders, the higher your score, the lower the risk you represent.

A lower score sends the signal that you might have fallen into some bad financial habits or circumstances. Paying late, for example, is a big no-no if you want to maintain a strong credit standing. So is maxing out your credit cards, regardless of the reason. Your credit report doesn’t know if you spent the money to repair your flooded basement or on new shoes.

So why do you need to know what your credit score is if you're trying to make a plan to pay off credit card debt? 

Knowing your credit scores can help you weigh the different options to get rid of your debt. For example, your options might include:

• Personal loan for debt consolidation

• Home equity loan

• Debt relief

We'll take a deeper dive into how those options work in a moment. For now, it's enough for you to know that your credit score can influence which path you take. 

3. Your income and monthly payment capacity

How much money you make—and what you spend each month—can set the pace for how quickly you're able to reduce credit card debt. The more surplus cash you have in your budget, the more money you can throw at pricey credit card debt. 

If you haven't checked your budget lately, or you don't have a budget at all, it's time to break it all down. 

Here's how to make a budget:

• Gather up copies of your pay stubs, bank statements, and most recent credit card statements.

• Add up all of your income for the month. That includes money earned from working, self-employment, side hustles, part-time jobs, disability payments—any money you can count on to pay the bills. 

• Add up all of the money you spend each month on expenses, like rent, insurance, transportation, childcare, groceries, utilities, dining out, entertainment, debt payments—everything.

• Subtract what goes out from what comes in. 

The goal is to spend less than you bring in. If you have money left over, you can use it to pay down your debt using the snowball method or the avalanche method, which we’ll show you below.

That’s sometimes easier said than done. The paycheck-to-paycheck struggle is real. If you don’t have any money left over, or if there isn’t much, there are two moves you can try: find an area where you can cut back on spending, or find a way to bring in more money.

Just like adding up your credit card balances, tracking spending so that you can make cuts might not be your idea of a fun night out. If you’re not thrilled to face the prospect of giving up a LOT of things you enjoy, we hear you.

There's a big payoff if you can find money to knock out your debt. Credit card debt is a heavy, expensive burden. The sense of relief you'll gain once the debt is gone can far outweigh any temporary spending sacrifices you have to make. 

But what if you can’t make cuts? And what if you're spending more than you make? You’ve got options, including debt consolidation and debt relief. 

Stick with us.

Step 2: Learn about 5 ways to get rid of credit card debt

What is the best way to pay off credit card debt? Opinions differ, but you'll typically see these options on the list:

• Debt snowball

• Debt avalanche

• Debt consolidation loan

• Home equity loan

• Debt resolution

Bankruptcy is also a possibility, and it could make the most sense if no other option provides the kind of relief you need. 

Before we dig into the methods, here's what you need to know: There's no right or wrong way to approach paying off debt. It’s your dragon to slay.

Ultimately, you get to choose what will work best for you. 

Here are five tried-and-true methods for tackling credit card debt. 

1. DIY: snowball

Why it works: The debt snowball method can help you stay motivated to get rid of your debt.

You might have heard of the debt snowball method. It's a really popular way to pay off debt. If you're scratching your head over what it means, here's how it works:

• List your debts in order, from lowest balance to highest.

• Pay as much money as possible toward the smallest debt while making minimum payments to the other debts.

• Once you pay off the first (smallest) debt, add that payment to the minimum payment you were making on the next smallest debt.

• Each time you pay off a debt, the size of your payment snowballs. 

• Repeat this process until all your debts are paid off. 

If you've tried to pay off credit cards before but struggled, the debt snowball could be a great strategy. It's designed to help you wipe out small debts quickly, which can give you a feeling of satisfaction and the mental boost to keep going. 

2. DIY: avalanche

Why it works: The debt avalanche method can save you money in interest charges.

The avalanche method to pay off debt works just like the snowball method, but instead of starting with the smallest debt, you start with the debt that has the highest interest rate. 

You can use online credit card calculators to figure out how much of a financial advantage this method would give you. Depending on how much debt you need to pay off, the avalanche method might get you out of debt a month or two faster than the snowball method.

3. Debt consolidation loan

Why it works: A debt consolidation loan streamlines payments (and potentially saves on interest).

With a debt consolidation loan, you borrow money and use it to repay multiple smaller debts. The way a debt consolidation loan works is that it moves your debt; it doesn’t get rid of the debt. That part’s up to you. But a consolidation loan could streamline your debt and help you succeed. 

Debt consolidation can offer multiple benefits:

• Simplify, and potentially lower monthly payments. With a single loan, you have fewer bills to worry about paying each month. Also, it’s possible to get a monthly payment that is lower than the total of all the monthly payments you are currently making on your credit cards.

• Possibly save on interest. The average interest rates for debt consolidation loans are much lower than the average interest rates on credit cards. The rate you get will depend on the details in your application. Many people can lower the overall cost of their debt. 

4. Home equity loan

Why it works: Home equity loans can lower the cost of your credit card debt and give you more time to pay. 

Own a home? You might have a built-in option for dealing with credit card debt via home equity. You could borrow against your home equity. Home equity is the difference between what you owe on your mortgage and what your home is worth. 

A home equity loan could put a lump sum of money in your hands that you can use for just about any reason. You could pay off high-interest credit card debt, fund home renovations, or meet other financial needs.

5. Debt relief

Why it works: Debt relief allows you to get rid of unsecured debts for less than the full amount owed. 

Resolving your debt means working with your creditors to forgive a portion of what you owe. You can try to negotiate with your creditors yourself to resolve your debts, or you can work with an expert debt relief company.

Resolving debt could save you money and help you get rid of debt faster than you would on a payment plan that’s hard or impossible for you to afford.

How do you get debt relief? 

It usually doesn’t work until you’ve fallen behind or gone into collection status on your debts. That’s because if you’re keeping up with your payments, the creditors won’t believe that you can’t keep doing so. But if you’re behind and it’s not likely that you’ll be able to repay the debts in full, you can explain your financial hardship and make an offer. You might need to have a lump sum of money ready in case they accept your offer.

Step 3: Compare and choose credit card repayment options

Deciding how to pay off credit card debt means figuring out what you need most. Here's how each of the five credit card debt repayment options explained earlier compares, based on five key characteristics.

Predictable monthly payments

Why it matters: Predictable payments make it easier to create and stick to a budget each month. There's often less worry about being able to maintain your debt repayment plan when you know what your payments will be month to month. 

• Debt snowball: Monthly payments can change based on what you have available in your budget. 

• Debt avalanche: Monthly payments can change based on what you have available in your budget. 

• Debt consolidation loan: A debt consolidation loan offers fixed monthly payments for the entire loan term. 

• Home equity loan: Home equity loans offer fixed monthly payments for the entire loan term when your interest rate is also fixed. 

• Debt relief: Debt relief lets you make one monthly payment, which can be fixed or variable depending on your plan. 

Potential to save on interest

Why it matters: Reducing interest means more money you can save or apply to other financial goals. Lowering the interest rates on your debt could also help you pay it off faster. 

• Debt snowball: The debt snowball typically doesn't save you any money on interest. 

• Debt avalanche: The debt avalanche method can reduce the total amount of interest you pay over time compared to other methods. 

• Debt consolidation loan: A lower rate could reduce the interest you pay, but your actual savings also depends on your loan term. 

• Home equity loan: A lower rate could reduce the interest you pay, but your overall savings is also tied to your loan term. 

• Debt relief: You could save money on interest if you're able to resolve debts for less than what's owed. 

Time to pay off

Why it matters: Your timeline for paying off credit card debt matters because it impacts your motivation; you may begin to lose steam if it feels like your debt payoff journey is taking too long. It can also cost more money in interest fees the longer it takes to get debt-free.

• Debt snowball: The debt snowball can deliver some quick wins if you're able to pay off a few smaller debts quickly, but typically takes several years depending on your balances. 

• Debt avalanche: The avalanche method may take longer to pay off your first card if you're prioritizing larger balances, but could be faster than the debt snowball overall. 

• Debt consolidation loan: A debt consolidation loan may take anywhere from one to six years to repay depending on your terms. 

• Home equity loan: Home equity loans can have repayment terms from 10 to 20 years. 

• Debt relief: Resolving credit cards could help you get rid of your debt in two to four years. 

Discipline needed

Why it matters: Debt repayment plans work best when you're committed. You should be comfortable with the amount of discipline that's required for the strategy you choose. 

• Debt snowball: The debt snowball can keep you motivated if you pay off smaller debts quickly, and you'll just need to update your payment amounts as you pay off cards. 

• Debt avalanche: The debt avalanche requires a savings-focused mindset, since the goal is not to pay off debts fast but to pay them off with as little interest as possible. 

• Debt consolidation loan: You just need to stick with the fixed monthly payments for the entirety of the loan term; automatic payments can make this easier. 

• Home equity loan: You'll need to stay on top of your payments, since failing to pay puts your home at risk. 

• Debt relief: Debt relief requires you to commit to a monthly payment and be patient until all your debts are resolved. 

Credit impact

Why it matters: Your credit scores can influence whether you can borrow money, rent a place to live, get utilities in your name, or even get a job. Some debt repayment methods have less impact on your scores than others. 

• Debt snowball: The debt snowball could help your scores if you make monthly payments on time, don't add to your debt, and keep your credit card accounts open. 

• Debt avalanche: The avalanche method could also help your score if you're paying on time and not creating any new debt with your cards. 

• Debt consolidation loan: New credit can cause a temporary credit score dip, but shifting credit card balances to a loan could improve your credit utilization, and making on-time payments to the loan could also help your scores. 

• Home equity loan: New credit can cause a temporary credit score dip, but using a home equity loan to pay off credit cards could improve your utilization ratio and you could benefit from on-time payments. 

• Debt relief: Debt relief usually requires that you be behind on your payments, which can hurt your credit scores, but they can recover over time. 

Comparing debt repayment options

Tips to help you pay off credit card debt faster

There's no real secret to how to pay off credit card debt fast, though it would be nice to wave a magic wand and set the balances to $0. The reality is that paying off credit cards takes time and patience. Adding some practical tips to your debt payoff playbook could help you stay on top of what you owe and maintain positive energy as you work toward your goal. 

1. Pay more than the minimum 

Making only minimum payments will keep you in debt for a long time, especially if you have credit cards with high APRs. It could take years to pay off even a small balance.

The better option? Pay as much as you can above the minimum each month.

For example, you could try:

• Adding a flat dollar amount to the monthly minimum

• Increasing your monthly payment by a set percentage (i.e., 5%, 10%, etc.)

• Doubling (or tripling) the minimum payment

• Rounding up your payment to the next $10 (or $100 if you want to be really ambitious)

If making a big payment is hard for you, try paying biweekly or even weekly. Every extra dollar you can pay gets you out of debt sooner.

2. Create a financial plan

Your debt payoff plan is your roadmap for getting from Point A to Point B financially. With no plan, you might not make progress.   

So what does a good financial plan include? It really depends on your situation, but it might cover: 

• Get a handle on your budget

• Pay off debt 

• Save for emergencies

• Buy a home

• Plan for retirement

You might not have these exact goals, but no matter what your financial goals are, they’ll take time to accomplish. If you don't have a financial plan in place, think seriously about what you want to accomplish.

If you want a little help coming up with a workable plan, don't be afraid to reach out. Talking to a debt expert could help you bring your money vision into focus. 

3. Automate your payments

Paying credit cards and other bills late hurts you. For one thing, you’re likely to get hit with late fees and penalty interest rates. For another, your credit score is likely to suffer. 

Automating payments is a great strategy that helps protect you from that fallout. You can schedule automatic payments through your bank's online bill pay service or through the creditor. 

Chip away at your debt, and protect your credit standing. Win-win.  

And here's one more benefit to automation: You may qualify for a rate discount if you choose a debt consolidation loan or home equity loan to tackle debt. Many lenders will reduce your rate slightly when you enroll in autopay. 

4. Use credit cards carefully

Credit cards are convenient, and a lot of them offer some pretty awesome rewards. Plus, they could help you build a good credit score if you're using them in ways that support your financial goals. The truth is, it can be hard to use credit cards responsibly when you’re trapped in a cycle of debt.

Consider these tips while you chisel away at your debt.

• Pay your bill on time every month (or early, if you can)

• Don’t open new cards just to get a welcome bonus

• Close any account that has an annual fee or monthly maintenance fee

• Avoid making new charges while you’re in payoff mode. If you keep using your cards while you’re trying to pay them off, you’re spinning your wheels. 

• Close all your accounts except one for emergencies. (Just be aware that closing credit cards with a balance due can ding your credit scores.)

• Learn how to lock the card so it can’t be used. It’s easy to unlock it when you want to, but that forces you to take an extra step, which might be enough time to reconsider the purchase.

Achieve is not a Credit Repair Organization and does not provide, or offer, services or advice to repair, modify, or improve your credit.

Achieve credit card debt solutions

Achieve personal loan for debt consolidation

Debt consolidation could be a good fit if you want to simplify the debt payoff process. But you don't want to choose just any lender to work with. That's where Achieve Loans comes in. Achieve Loans is purpose-built to help people understand and manage their finances by offering personal loans for debt consolidation ranging from $1,000 to $50,000. 

Terms for these loans range from two to five years. Approval and funding are fast, and you can even pick your monthly payment date, which is super budget-friendly. 

Achieve offers three discounts to help make your loan even more affordable: 

• Co-borrower savings . You may be eligible to reduce your interest rate by adding a qualified co-applicant

• Retirement savings. You could get a lower rate by showing proof of sufficient retirement savings (don't worry, your savings is NOT used as collateral for the loan)

• Debt payoff. We'll also give you a discount when you let us use at least 85% of your loan funds to pay your creditors directly. 

If you're thinking, "what's the catch?", there is none. Achieve Loans charges no hidden fees or prepayment penalties. We want to make it as easy as possible for you to get rid of your expensive credit card debt for good. 

So, if you're tired of throwing money away on credit card interest, consolidating debt with a personal loan offered through Achieve Loans could be a great solution. 

Learn how personal loans offered through Achieve work

Achieve home equity loan

Home equity loans are usually fixed-rate loans for one lump sum. Home equity lines of credit are usually variable-rate loans that allow you to access the amount you need, up to your credit limit, over a period of time.

The Achieve home equity loan combines the best features of home equity loans and home equity lines of credit.

Our home equity loan comes with a fixed interest rate and a five-year draw period. You can borrow up to $150,000, depending on your home equity. Achieve Loans members who take out this type of loan to consolidate credit card debt usually save an average of $10,000 a year. In fact, we won’t even offer this loan if we don’t think you can save at least $200/month on your current debt payments.

Check your eligibility for a home equity loan offered through Achieve Loans.

Debt relief through Achieve

You could try negotiating with your creditors yourself. But it’s time-consuming and often more than a little intimidating. Achieve can help. 

The debt relief program from Achieve works with your creditors on your behalf. We create a personalized plan that helps you become free from debt on a faster timeline than the minimum monthly payment method. In fact, more than 60% of Achieve members resolve their first debt within three months of joining.

The Achieve debt relief program takes the guesswork out of deciding which creditor to pay, and when. In addition to credit card debts, we can also help you resolve medical bills and other loans. Our team of experts works to reduce what you owe, and all you have to do is stick to the plan and make your scheduled monthly payments. 

Want to learn more? Get your free Achieve debt relief evaluation.