5 ways to pay off credit card debt
By Rebecca Lake
Reviewed by Betsalel Cohen
Jan 30, 2023
Read time: 13 min
You can DIY your credit card debt or get professional help.
Resolving debt could help you pay down what you owe faster.
The payoff method you choose can affect your credit scores.
You don't have to stay stuck in credit card debt. You can pay it off — and turn the money you were paying toward interest into savings — if you've got the right plan.
Ready to ditch your debt for good? We've got five actionable ways to do just that.
Check your finances
You wouldn't head out on a 3,000-mile road trip without checking the GPS (or at least grabbing a map), right? Paying off credit card debt is kind of the same way.
Before you begin the journey, it helps to know where you're starting from. Here are three things to check as you gear up to pay off 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 improve your credit score. 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 pay off credit card debt?
Knowing your credit scores can help you weigh the different options for paying off credit card balances. For example, your options might include:
Home equity loan
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 debt payoff 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 pay off 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 do it:
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 or 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 things 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 resolution.
Stick with us.
5 ways to pay off credit card debt
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 pay off debt.
You might have heard of the debt snowball method. It's a really popular way to attack 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 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 to pay off multiple smaller debts. So, for example, say you have $20,000 in credit card debt across five cards. You could get a debt consolidation loan for that amount, then use it to pay off all your balances in one go.
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 are able to lower the overall cost of the 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 paying off credit card debt. You could borrow against your home equity. Equity is the difference between what you owe on your mortgage and what your home is worth.
A home equity loan can put a lump sum of money in your hands that you can use for just about any reason, including to pay off credit card debt.
5. Resolve debt
Why it works: Debt resolution allows you to pay off credit cards 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 resolution company.
Resolving debt could save you money and help you get out of debt faster than you would on a payment plan that’s hard or impossible for you to afford.
How do you resolve debts? 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 situation and make an offer. You’d need to have a lump sum of money ready in case they accept your offer.
Comparing debt repayment options
Why it's a good option
What to consider
Get a psychological boost when you pay off your first debt.
Easy to use.
It isn’t the most efficient way to save money on credit card interest.
Pay off higher interest debt first.
You might pay for a long time before you get your first win.
Debt Consolidation Loan
Potentially saves on interest if you qualify for a low-rate loan.
Get a more manageable single payment.
Possibly higher interest rates compared with secured options like a home equity loan.
Requires discipline to not run up credit card balances again once you pay them off.
Home Equity Loan
Potentially borrow a larger amount based on your equity.
Get a lower interest rate due to the loan being secured by your home.
Get longer to repay the loan.
Defaulting could put you at risk of losing your home.
If you take a long time to repay the loan, you might not save money on interest charges.
Debt Resolution Program
Reduce what you owe and get out of debt faster than by making minimum monthly payments.
Could negatively affect credit scores in the short term, though your scores may improve over time as you reduce your debt and credit utilization.
4 tips for paying off credit card debt
Hopefully, you're now feeling energized with the knowledge that there’s a debt payoff method that’s right for you. To wrap things up, here are a few more tips to help you manage your debts.
1. Pay more than the minimum
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.
If 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
Remember the road trip we mentioned at the beginning? Your 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 the 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 achieve.
If you want a little help coming up with a workable plan, don't be afraid to reach out. Talking to a credit counselor or financial planner can 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 will suffer.
Automating payments is a great strategy that protects you from that fallout. You can schedule automatic payments through your bank's online bill pay service or through the creditor and never worry about paying late again.
Chip away at your debt, and give your credit score a boost. Win-win.
4. Use credit cards wisely
Credit cards are convenient, and a lot of them earn some pretty awesome rewards. Plus, they can help you build a good credit score if you're using them wisely. The truth is, it can be hard to use credit cards responsibly when you’re trapped in a cycle of debt.
Follow these tips while you pay off your debt.
Pay your bill on time every month
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 during your payoff. 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. 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 credit card debt payoff options
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 comes in. Achieve is purpose-built to help people understand and manage their finances. One of the ways we do so is 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 discount. You may be eligible to reduce your interest rate by adding a qualified co-applicant
Retirement savings discount. 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 off your creditors directly.
If you're thinking, "what's the catch?", there is none. Achieve charges no hidden fees or prepayment penalties. We want to make it as easy as possible for you to pay off 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 could be a great solution.
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. Achieve 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.
Debt resolution 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 resolution 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 resolution program takes the guesswork out of deciding what to pay off, 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.
Rebecca is a senior contributing writer and debt expert. She's a Certified Educator in Personal Finance and a banking expert for Forbes Advisor. In addition to writing for online publications, Rebecca owns a personal finance website dedicated to teaching women how to take control of their money.
Betsalel is a contributing writer for Achieve. Passionate about helping people improve their finances. He worked in mortgage banking, private banking, and personal financial coaching. When he is not working, he loves running and spending time with his family.
Frequently asked questions - How to pay off credit card debt
Is a balance transfer a good way to pay off credit card debt?
A balance transfer means moving credit card balances from one card to another, for a small fee.
A balance transfer is a good way to pay off credit card debt if you can save money on interest and make some traction against your balance.
It’s common to see zero percent balance transfer offers. For the promotional period, you pay no interest. All of your payments go to knocking down the principal balance. When the promotion period ends, you’ll start to be charged the regular interest rate.
There are a couple of caveats with this approach. While using balance transfers may work once or twice, it's not a good long-term strategy. At some point, credit card offers may dry up if you are not paying down your debts. So this approach can be like kicking the can down the road. Also, if you transfer balances but then run them up again while you’re still paying off the transferred balance, you could end up in more debt and a worse financial situation.
How long does it take to pay off credit card debt?
Most people can pay off their debt within 2-5 years. The actual timeline is different for everyone. If you can put a lot of money toward your debt each month, you might be able to pay it off in a matter of months. On the other hand, it could take several years if you have high balances and make smaller payments.
How can I track my credit card debt?
You can track your credit card debt using a spreadsheet or an app. You can also use a personal finance app that links to your credit card accounts and monitors your debt and all of your transactions. Mint and Goodbudget are two free options.