How to Pay Off Credit Card Debt in 3 Steps

How to Pay Off Credit Card Debt in 3 Steps

Credit card debt is incredibly common. Americans hold $834 billion in credit card debt, according to the New York Fed, which is a huge number to wrap your head around. If you have credit card debt, you are not alone.

But you also don’t have to live with credit card debt. Rather than stressing about that monthly payment, or multiple monthly payments, you can follow some tried and true strategies to pay off your credit card debt for good.

If you dream of debt freedom, follow along with this guide and pick the credit card debt payoff strategy that makes the most sense for your unique needs. If you want to know how to pay off credit card debt, read on to learn more.

1) 0% Balance Transfers

The first place many credit card debt holders look to pay off credit card debt is a balance transfer offer. If you are already comfortable with credit cards, balance transfer offers allow you to stay within the credit card realm while getting a period of zero interest.

While the interest rate is low, you can make aggressive payments to pay off a big portion, if not all, of your credit card debt. The big benefit is stopping interest from accruing, which at a rate of 15% to 30% per year for many credit cards can be enough to cripple your finances.

When your debt stops growing from interest each month, you can make faster progress paying down your balances and hopefully get your credit card debt taken care of with an ending $0 balance. But balance transfer offers are not always the best choice.

Balance transfer offers don’t get you away from credit card debt, they just move your debt to a new credit card. That credit card issuer didn’t give you the balance transfer offer out of the goodness of their heart.

It will make money through fees and an expectation that many people won’t pay off their debt before the time expires, and may even rack up more credit card debt so they can start charging interest on it down the road.

Only use a 0% balance transfer if you have the willpower and the financial ability to get your debt paid off, or a significant chunk paid off, during the 0% APR introductory period. This is one of the most popular options to consolidate credit card debt.

2) Credit card debt consolidation

Your next option is to consolidate your loans into one new loan. Sometimes people do this with balance transfer offers and combine all debt into one credit card, ideally with a 0% introductory period as explained above. But that isn’t your only consolidation option.

Depending on your credit score, you may qualify for a personal loan that has a lower interest rate than most credit cards. Personal loans are also typically installment loans, not revolving credit, which puts you on a clear path to payoff with a predictable end date at the end of the loan.

Popular options for debt consolidation include social marketplace loans through services like Lending Club and Prosper or through lenders like a credit union or one of a new crop of nonbank lenders like SoFi or Avant. The key to success with this type of loan is your credit score.

If you have a poor credit score, you might not get approved at all, and if you are approved your interest rate could be as high as your credit card. With a high credit score, however, it is easy to qualify for a new loan at a lower interest rate than most cards charge. Find out more about your credit score here.

If you own a valuable asset like a home, you can also consolidate your debt through a new home equity loan, sometimes called a second mortgage, or by refinancing your outstanding credit card debt into a new mortgage loan.

While this increases your mortgage balance, it wipes out your credit card debt and gives you an intently lower interest rate, lower total monthly payments, and a fixed installment schedule with a debt freedom date waiting for you at the end.

The drawback of this option is that if you stop paying, you can lose your house through an eviction. It saves you money, but only if you really pay on time each month going forward.

3) Debt snowball and debt avalanche

Another method that has been proven to pay off $40,000 student loans in 2 years and 6 days. That is the debt avalanche, a cousin to the debt snowball method popularized by personal finance guru Dave Ramsey.

In fact, this is one of the most popular options for how to get out of credit card debt.

With a debt snowball or debt avalanche, you don’t get any new loans or credit cards. You just pay off the debt you already have, but using a strategic approach to pay off specific loans first, freeing up cash each month for bigger and bigger payments on the remaining debt.

You can start this right away. All you need is a pencil and paper, information about your current credit card debt, and a few minutes to get started. To take it to the next level, you can use a spreadsheet or a debt payoff app like

The debt snowball and debt avalanche work almost the same way, but with the debt snowball you target the lowest balance debt first, and with the debt avalanche you target the highest interest rate debt first.

Ramsey and other debt snowball fans argue that paying off the lowest balance debt first for a psychological victory early on in the payoff process.

Our recommendation would be to opt for the debt avalanche, because it saves you more on interest during the payoff process, and leads to a slightly faster payoff timeframe. Because the debt avalanche is mathematically better for your money, we’ll focus on that here.

To put together a debt avalanche, list out all of your credit card debt in order of interest rate, highest to lowest. In the same list, add the current total balance and minimum monthly payment for each card.

Then, each month make the minimum payment of every card except for the one with the highest interest rate. For that card, pay every dollar you possibly can. Really squeeze your budget, cut expenses, and push to pay as much as you can.

When that card is paid off, roll the payment into the next highest interest card, and continue until you are all paid off. Sure, it is easier said than done, but nothing great in life comes easy.

Getting out of debt offers huge financial opportunities to save, invest, and grow your money for the long haul.

Pay off your bad debt and pursue a debt free lifestyle

Your personal finances are too important to ignore, and credit card interest is too expensive to simply make the minimum payment only each month.

If you follow that strategy, you could find yourself paying off old TVs and vacations for years, and never gain any headway on boosting your finances and progressing toward a debt-free lifestyle.

Any of these methods could lead to debt freedom, it is just up to you to choose one and get started. And there is no time better than today to get moving on your new financial plan.

Editorial Note: This content is not provided or commissioned by the credit card issuer. Any opinions, analyses, reviews or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by the credit card issuer. This site may be compensated through a credit card issuer partnership.

This article was last updated June 5, 2018 but some terms and conditions may have changed or are no longer available. For the most accurate and up to date information please consult the terms and conditions found on the issuer website.

Our editors independently research, test, and recommmend the best products; you can learn more about our review process here. We may receive commissions on purchases made from our chosen links.

Article Staff

Eric Rosenberg is a finance, travel, and technology writer in Ventura, California. He is a former bank manager and corporate finance professional who left his day job in 2016 to take his online side hustle full-time.

Eric has written for sites such as Huffington Post, Business Insider, Forbes, Entrepreneur, Kiplinger, Mint, and Money.

Eric has two finance degrees (BSBA from the University of Colorado and MBA from the University of Denver) and has professional work experience as a bank manager and in corporate finance and accounting in the telecom and payments industries.

He has in-depth experience writing about banking, credit cards, investing, and other financial topics, and is an avid travel hacker.

When away from the keyboard, Eric enjoys exploring the world, flying small airplanes, discovering new craft beers, and spending time with his wife and little girls. You can connect with him at Personal Profitability or

Editor Jenna Holtz
Researcher Ronnie Langston
Art Director Cherry Barbacena

Join the conversation

How to Pay Off Credit Card Debt in 3 Steps

Thanks for reading my article. I value your feedback and invite you to join the conversation:

  • Share your opinion on the list
  • Suggest an item for consideration
  • Review items you've tried
— Eric Eric Rosenberg

You May Also Like

See more in Credit Cards