How to Get Out of Credit Card Debt — Your Guide

Total credit card debt in the United States is at $784.5 billion as of the third quarter of 2021, according to Experian. That’s a lot of debt — and about 95% of Americans have a credit card account open in their name. With so many Americans relying on credit cards, it’s clear to see that if you feel overwhelmed by credit card debt, you’re probably not alone.

If you’re struggling, you might be wondering how to get out of credit card debt. The good news is that it’s possible to tackle your debt and improve your financial situation. Here’s your guide to the easiest ways to get out of credit card debt.

1. Evaluate your current credit card debt situation

The first step is understanding where you’re at. By laying out the situation and seeing everything, you’ll be able to determine your starting point and make a more effective plan.

List out all your credit cards. This list can be written out, or you can make it in a spreadsheet. Whichever way you choose, though, it makes sense to use the following columns to display the information:

• Name of your card
• Card balance
• Interest rate
• Current minimum monthly payment

Now you have a clear view of exactly where you stand and a solid starting point for moving forward with getting out of credit card debt.

2. Look for unnecessary automatic charges to your cards

Now it’s time to look through your recent credit card bills. Find charges that are unnecessary, especially recurring charges for subscriptions you don’t use. Cancel these recurring charges. This should help prevent you from adding to your credit card balance.

It’s also a good idea to look for other credit card spending that might be unnecessary. Figure out if you can stop using your credit cards for a while and make other payment arrangements for your bills and expenses. The less you can use your cards as you tackle your debt, the better off you’ll be.

3. Call your credit card companies

Next, call each of your credit card issuers. See if you can get a lower interest rate on your card. A lower interest rate makes it easier to pay off credit card debt since more of your payment goes to reducing your principal.

Another strategy is to see if you can get a lower minimum payment on each card, which makes it easier to focus on one card at a time when you create your plan. With lower minimum payments, you can put more money toward one card at a time to pay it off quickly before moving on to the next card on your list.

4. Consolidate your debt

The best plan is the one you’re most likely to stick with until all your debt is paid off — a debt reduction plan that works for one person may not work for you, so carefully consider your situation. Here are four options for managing your debt:

Transfer debt to a 0% APR balance transfer credit card if possible

One of the easiest ways to get out of credit card debt is to take advantage of a 0% APR balance transfer. All of your payment goes toward reducing your balance when you aren’t paying interest. 

You might need to have good credit to get the best balance transfer deal, and keep in mind that balance transfer fees may apply. Additionally, you might not have a high enough limit to move all of your debt to the 0% APR balance transfer card. If this is the case, consider moving the balance with the highest interest rate so you can at least stop accruing those interest charges.

Take out a personal loan

If you can’t get a credit card balance transfer, consider looking into other types of credit card refinancing, such as getting a personal loan with a lower interest rate. With this type of debt consolidation, you get a new loan that’s big enough to pay off your other debt. Personal loans make sense when you have high-interest debt like credit cards and payday loans. If you qualify for an interest rate lower than what you’re paying on your credit cards, that can make a big difference in how quickly you pay off your debt.

Switch to a home equity line of credit (HELOC)

In some cases, you might have too much debt to pay it all off with a personal loan or a credit card balance transfer. A bank or credit union might let you use your home as collateral to get a bigger loan if you’ve built up a large amount of equity in your house over time.

The lender looks at the difference between how much you owe on your home and how much it’s worth and offer a lump sum, or a line of credit, based on your equity. You can then use this money to pay off your high-interest debt and then repay your home equity loan or line of credit over time.

You can usually get a better rate than you would with a personal loan because you secure the debt consolidation loan with your home. However, this can be risky because you’ve taken unsecured debt and tied it to your home’s value. If you fall behind on your loan payments, you could lose your home.

Use a debt management or debt settlement company

There are companies like Tally that specialize in helping people manage their credit card debt. Tally not only offers a low-interest line of credit where you can consolidate your debt, but they also help simplify and prioritize your monthly payments.

You could also consider debt settlement if you're having trouble repaying debt. Debt settlement companies like National Debt Relief and Freedom Debt Relief help you resolve unmanageable debt with the goal of avoiding bankruptcy. Debt settlement is when a creditor agrees to accept less than what you actually owe them in order to settle the account. 

With debt settlement, you discontinue making payments to your creditors and instead send them to a third party that keeps the money in a separate savings account. They negotiate with your creditors on your behalf on agreements to pay a portion of what you owe. While this could damage your credit score for a period of time, it could also help you get out of debt and work toward a better financial future.

5. Create a plan for paying off your credit cards

Once you’ve done what you can to make it easier to pay off your credit cards, it’s time to put together a repayment plan for systematically demolishing your debt. It’s easier to get out of debt when you have a plan to follow.

First, sit down and evaluate your overall monthly costs. Consider your needed expenses, like housing, utilities, food, insurance, your current minimum payments, a modest emergency fund, and other bills. You can also set aside a reasonable amount for fun. The reality is that if you restrict yourself too much, it’s harder to stick with your debt payoff plan. After you’ve accounted for these items, see what you have left over. This “extra” money” will go toward paying down your credit card balances.

Now decide on your actual plan of attack. There are different approaches that work for different people. Here are three different strategies and how they work:

• Divide money evenly across cards: Divide your extra money evenly and use it to increase your credit card payment to each card each month. So, if you have six cards, you pay the minimum on each, plus one-sixth of your extra money toward every card. This works best if you want to “set it and forget it.” Use automatic payments to make the same payments on all your cards every month until the debt is gone.
• Debt snowball method: Order your debts from the smallest to the largest balance. Pay the minimums on all cards and put your extra money toward the smallest balance. Once that balance is paid off, focus all your extra money on the next card on the list. This method works well for those needing a quick win. Psychologically, you get a motivating jolt as you pay off each debt — and that jolt comes easier if you can retire a smaller balance early on.
• Debt avalanche method: Rather than ordering your debts from smallest to largest, you instead start by tackling the debt with the highest interest rate. This method will result in the smallest amount of interest paid and will likely get you out of debt fastest. However, it can be psychologically difficult, since your first “win” in retiring a debt takes longer. If you can stick through that, though, the debt payoff accelerates toward the end.

6. Start a side hustle

If you want to boost your speed of getting out of debt and improve your personal finances, consider finding additional ways to make money. Choose something you enjoy doing or that doesn’t stress you out too much. It should pay somewhat decently. Take all the money you earn from your side hustle and put it toward your credit card debt, according to your chosen plan. This will really supercharge your efforts.

7. Create a visual reminder/tracker

One of the easiest ways to stay motivated as you get out of credit card debt is to create a visual reminder of the progress you’re making. There are several ways you can do this, including:

• Marking off debt milestones on a calendar
• Creating a chart and sticking it to your fridge
• Using a whiteboard to document your progress
• Buying or creating a thermometer and filling it in as you make debt payments

No matter how you do it, a reminder can help you see your progress and keep you motivated to stick with your payment plan.

8. Check your cards regularly

Choose a time of the month to review your credit card balances. You can use this information to update your spreadsheet of balances and minimum payments, as well as to update your visual reminder. You don’t want to check too often, since it might be harder to see the differences. But if you check monthly, you’ll start to see solid progress that you can feel good about.

If you don’t feel like you’re making progress

Sometimes, even with a plan on how to pay off debt, it still feels like you’re not making any headway. In these cases, you might need to take additional steps to move forward:

• Speak with a nonprofit credit counselor: You can visit the National Foundation for Credit Counseling website to find resources and a credit counseling agency near you. If you’re struggling, a good counselor can help you put together a debt management plan that works with your budget.
• Take out a personal loan with a better interest rate: Even if you weren’t able to get a personal loan earlier, after a few months of paying down your credit card debt, you might be able to qualify for one. See if this will work for you now.

Tips for staying on track as you get out of credit card debt

To make the most of your efforts, here are some tips for staying on track with the easiest ways to get out of credit card debt:

• Stop using your credit cards: Stick to a budget and avoid using your credit cards. Use cash as much as possible so you avoid adding to your balances. A good budgeting or money app can help you set goals and stay the course.
• Set automatic payments: When you make automatic payments, it’s much easier to stick with your debt repayment plan. You won’t forget or put off your payments.
• Incentivize yourself: Create a reward for paying off a card, preferably an experiential reward — not one that will cost a bunch of money. This will give you something to look forward to as you move through your plan.

If you approach your credit card debt in a systematic manner, you’ll be more likely to succeed and emerge debt-free. Create a plan and stick with it, and you’ll be on firmer financial footing sooner than you might think.

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