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How to Get Out of Credit Card Debt

It's not an easy thing to do. But these strategies can help.

Stephen Swintek/Getty Images

Credit card debt can be overwhelming. Once you’ve spent more than you can pay off, your debt can balloon as interest charges rack up and deepen the hole you’re in. That noted, there are proven strategies that can help you pay off your debt by breaking the process down into approachable steps. Here are some of the best practices for reducing spending and developing a practical plan to pay off your credit card balances.

Identify how you got into credit card debt

The most important step is to understand how you got into debt in the first place. Otherwise, you risk repeating the cycle, even after you pay off your current balances.

Brittney Castro, a certified financial planner for the Mint finance app, believes bad habits often stem from a lack of financial literacy. “College students are often offered a credit card on campus or apply for multiple credit cards online, thinking they are more or less free money,” she says. “What they aren’t told is if the balance is not paid off in full every month, they will be charged the credit card’s APR (interest rate) on their balance (the money spent using the card), which can sometimes be as high as 29.99%. This can quickly spiral into a debt balloon.” 

To avoid this situation, it’s important to know how credit cards work. Credit comes in handy in many situations, but the convenience could cost you. The longer you carry a balance, the more you will pay in interest charges. Proper and smart credit card habits include making payments on time and paying off the full balance every month,” she says. “In other words, only charge it if you can afford it.” 

Build a budget

There are plenty of reasons why you may be in over your head with credit cards. You may not be aware of how much you actually spend. Or you had an emergency, but no emergency savings fund to draw on, and paid with your card instead. Regardless of the reason, knowing how much money comes in -- and goes out -- is essential to taking control of your finances. Creating a budget to rein in spending and pay down your debt is crucial. 

Plain and simple, credit card debt is the result of spending more than you can afford to pay back. A good budget could take some time to set up, but will ultimately act as a visual tracker of your financial status. To build a budget, create an income category by adding up all the money that comes in each month. Then categorize and add up all your expenses. Budgeting apps do most of the heavy lifting. Some of the most popular are:

Once you’ve set up a budget, ask yourself the following questions:

  • Are my expenses more than my income? If you’re spending more than you make, you have two options: cut back on your expenses or pick up extra hours at work (or a side hustle) to bump up your earnings.
  • Am I setting aside any money towards an emergency fund? Growing a rainy day fund could help you avoid turning to credit cards in an emergency. 
  • Could I lower my spending? Take a look at your spending for ways to cut back, such as dining out less or canceling some subscriptions. Send the money you save towards paying off your credit cards faster. 
  • How much do I owe? Figure out the current balances on each of your credit cards to decide how much you owe and how long you’ll need to pay them off.
  • How much interest am I paying? Determine how much of your card payments go towards interest and take note of the cards with the highest interest rates.

Choose a repayment strategy

Once you’ve made a budget and have an idea of how much credit card debt you need to pay off, it’s time to start whittling away at it. There are a few ways you could approach debt payoff. Some of the most popular methods to get out of credit card debt are:

The avalanche method

If you have more than one credit card to pay off, the avalanche method saves you the most money, since you’re paying off your most expensive debt first. Start by allocating the most money towards the credit card with the highest interest rate and make sure you’re paying at least the minimum on all the other cards. Once you’ve paid the balance off on the highest-interest credit card, focus the funds on the next-highest-interest card and so on.

The snowball method

The opposite of the avalanche method is the snowball method. It uses momentum to keep your debt payment plan going. Pay off the smallest balance first and build on your success until you pay off the card with the highest balance. Hide your cards as you pay them off to avoid the temptation of spending again.

Pay more than the minimum

A general way to get out of credit card debt is to pay more than the minimum for your card each month. Otherwise, it could take years to get rid of a balance. For example, paying the monthly minimum of a $5,000 balance at 17% APR can take ten years and cost a total of $10,000. 

In addition, carrying high balances could significantly affect your credit score since credit utilization weighs heavily. Carma Peters, CEO of Michigan Legacy Credit Union, says, “The largest negative impact on your credit score is keeping a balance that exceeds more than 50% of your limit.” The sooner you pay down your balance, the faster you can rebuild your credit.

Balance transfer card

Certain credit cards offer enticing signup bonuses such as a low introductory rate for balance transfers. If you have good credit, you may qualify for a card offering balance transfers at 0% interest for 12 months or longer. Taking advantage of a balance transfer can buy you time to pay off a high balance for free. Just make sure you’re able to pay the balance in full before the term ends, or you could get hit with interest for the remaining amount, or worse, the full transferred balance.

Debt counseling program

Debt counselors can work with you on creating a repayment plan, as well as give you advice on how to manage your finances. Keep in mind that most debt counselors are fee-based. Depending on your financial situation, it may be better to manage your own debt repayment strategy and apply the fee you’d pay a counselor toward paying down your debt.

Hardship assistance programs

If you’re struggling with the bills and experiencing financial hardship, contact the card issuer. Creditors typically have hardship assistance programs available that could waive certain fees, lower your interest rate or defer your payments for a few months.

What is debt consolidation and how does it work?

Debt consolidation is when a borrower takes out a new loan and then uses the loan proceeds to pay off their other individual debts. This can include everything from credit card balances, auto loans, student debt and other personal loans.

Most debt consolidation loans are fixed-rate installment loans, which means the interest rate never changes and you make one predictable payment every month. But it is important to keep in mind that a debt consolidation loan does not simply erase your debt, and you may end up paying more in the end if you can’t manage to keep up with the monthly payments.

Debt consolidation loan

If you’re juggling several credit cards, the best plan may be to take out a personal loan for the total you owe on all credit cards. You’re essentially consolidating all your debt into one loan to save considerably on interest. So if you have three credit cards with different interest rates and minimum payments, you could use a debt consolidation loan to pay off those cards -- leaving you with just one monthly payment to manage instead of three.

The average credit card interest rate hovers over 18%. In comparison, a debt consolidation loan’s APR is around 6%. That’s a big savings. However, your credit score could affect your interest rate -- and the chances of getting approved for a loan.

Consider debt settlement or bankruptcy

Debt settlement and bankruptcy are two additional ways to get out of credit card debt. The trouble is, they will likely affect your credit score. Brian Dechesare, a former banker and founder of Breaking Into Wall Street, warns that these methods should be used as a last resort. “You should only consider both in extreme situations when you’ve exhausted all other options and can’t make ends meet to pay,” he says. 

Debt settlement

Contacting the creditor to negotiate a lower balance can help you get out of credit card debt if you have a larger balance. According to Dechesare, “Most lenders will only consider a debt settlement if the debt is over $10K, so for smaller debts, you may be better off consolidating or paying it off.” 

You could get as much as half forgiven, but it comes with lasting consequences. Dechesare says, “debt settlement could drop your credit score by 100 points and will stay on your record for seven years.”


For extreme financial hardship, bankruptcy can help you wipe your slate clean. If a court grants you a bankruptcy discharge, you’ll no longer be obligated to pay your debts. There are significant drawbacks worth noting, however. You’ll be required to attend credit counseling before filing. It can be expensive when you account for filing fees and a bankruptcy attorney. If your debt is discharged, the bankruptcy will be public record and remain on your credit report for seven years, as well as send your credit score plummeting.

Review your finances regularly and set goals

Once you’re out of debt or on your way to being credit card debt-free, it’s important to establish healthy financial habits to keep you from slipping. Sticking to your budget will be vital. You may want to do an annual review of your spending and make budget adjustments. In addition, prepare for unexpected expenses by putting money into an emergency savings account. Lastly, set goals and stick to them. Saving a down payment for a house or establishing a retirement fund is a great way to keep your eye on the prize and your spending in check.

The bottom line

Each person’s situation is different, and what’s right for you may depend on when and how you got into credit card debt -- and what your budget and credit profile look like today. A good first step is reviewing your budget, contacting your creditors to seek out different repayment options, seeking out credit counseling and enrolling in a debt management program. Consolidating your debt or considering debt settlement or weighing bankruptcy options are other paths to debt relief. But each comes with a different set of consequences.

First published on Aug. 27, 2021 at 9:00 a.m. PT.

The editorial content on this page is based solely on objective, independent assessments by our writers and is not influenced by advertising or partnerships. It has not been provided or commissioned by any third party. However, we may receive compensation when you click on links to products or services offered by our partners.

Cynthia Paez Bowman is a finance, real estate and international business journalist. Besides, her work has been featured in Business Jet Traveler, MSN,, and She owns and operates a small digital marketing and public relations firm that works with select startups and women-owned businesses to provide growth and visibility. Cynthia splits her time between Los Angeles, CA and San Sebastian, Spain. She travels to Africa and the Middle East regularly to consult with women's NGOs about small business development.