How to pay off credit card debt: 7 tricks

If you’re working to pay off credit card debt, you probably understand a lot of the ways it can affect your finances. Whether you’re tackling debt that has grown slowly or you’re working to cover an unexpected expense, coming up with a plan can feel daunting.

Here are some tricks for tackling credit card debt that might help you get started.

Key takeaways

• Paying off credit card debt may help you save money on interest and help you improve your credit scores.
• Choosing an effective debt repayment strategy, building a budget and tracking your spending could make paying off debt more manageable.
• You may find debt relief options available if you contact your credit card issuer.

Figuring out how you got into debt may help you avoid issues in the future. Try going over your credit card statements from the past few months to find patterns. Are there places where you can make some changes to your daily or monthly spending?

For example, maybe you can cancel your gym membership and work out at home. Maybe you can cook more at home instead of dining out. 

If your credit card debt was the result of a large, unexpected expense, you could make a plan to create an emergency fund. This could help provide a cushion the next time something pops up.

Creating a repayment plan can help you figure out what works best for you and even help provide motivation. There are two basic strategies that can help you reduce debt:

• Pay off high-interest debts first. Using a strategy called the debt avalanche method, you make the minimum payments on all your debts and put extra money toward the balance with the highest interest rate. Once that debt is paid off, you put any extra money toward the balance with the next-highest interest rate and so on. This strategy can help you save money in the long term because high-interest debts are more costly. 
• Pay off the smallest debts first. If you would rather build momentum, the debt snowball method might make more sense. With this strategy, you make the minimum payments on all your debts but then focus on putting any available money toward paying off your smallest balance first. Once you’ve paid that off, you can dedicate any funds that have been freed up to your next smallest debt and so on.

You should always pay as much of your full credit card balance as you can, according to the Consumer Financial Protection Bureau (CFPB). Paying more than the minimum payment can help in a couple of ways, including:

• Reducing your debt more quickly. Paying more can help cover interest charges and decrease the total balance on your credit card.
• Limiting the interest you’ll owe over time. The less interest charged, the lower your minimum payments could be.

When you reduce spending, you can put more money toward debt and potentially even save money on interest. Here are some ways to manage your spending: 

• Create a budget. There are lots of different ways to budget, but in general, it goes something like this: List your monthly expenses, such as rent, utilities and groceries, along with your debts, such as credit card balances and student loans. Write down how much you earn each month, and subtract your bills and minimum required debt payments. The amount you have left over is a starting place to consider how much extra to put toward your debt payoff each month. You might even take advantage of your credit card’s features to help you budget.
• Set a goal. Once you know how much debt you have and how much you can pay toward it each month, figure out how long it will take to pay off the debt. Mark that date on your calendar. Having a goal in mind can keep you focused and motivated. 
• Track your spending. Use whatever tracking method works best for you, whether that’s an app, a spreadsheet or a pen and paper. Write down everything you spend money on, and review the log every few weeks. This is a good way to better understand your spending habits and maybe even find areas where you can cut back. 
• Tell a friend or family member. If they know you’re working toward a debt payoff goal, your loved ones may be able to offer support. They might also help you think of ways to budget or fun things to do for free, both of which could help you stick to your goals.

While you’re paying down debt, it may be helpful to pay for things in cash so you’re not increasing your credit card balances. And if you need to use a card for payments, consider using a debit card so you’re not borrowing money.

Debt consolidation allows you to combine multiple balances into one. Some people use a credit card balance transfer or a debt consolidation loan for this purpose. 

A balance transfer credit card offer lets you move unpaid debt from one or more accounts to a new credit card. These cards often come with a lower interest rate for a limited time, which could help you save money if you’re approved. But the lower promotional interest rate will eventually increase. So it’s a good idea to try to pay off the balance before that happens. 

For example, let’s say you have $5,000 in credit card debt and you open a balance transfer credit card with a 0% introductory annual percentage rate (APR). If the promotional period lasts 18 months, then you’d need to pay about $278 a month to pay off the balance before the interest rate increases. To make a more informed decision, it’s a good idea to check whether the card charges balance transfer fees—and how much they may be—and to understand the card’s terms and conditions before you apply.

A debt consolidation loan may work similarly to a balance transfer card. Debt consolidation loans are personal loans you can use to pay off multiple debts and convert them into one monthly payment. Then you make payments on the loan balance until you pay it off in full.

But debt consolidation loans often charge interest, so you could end up paying more per month than you’d planned—or erase any potential savings.

If you’re having a hard time keeping up with your credit card debt, the CFPB recommends reaching out to your credit card issuer and asking about options that may be available to settle credit card debt.

According to the CFPB, “Many credit card companies may be willing to help if you’re facing a financial emergency.” The CFPB goes on to say that you don’t have to be behind on your monthly payments to ask for debt relief assistance either.

If you’re having trouble with your monthly payments, you can try contacting your credit card issuer as soon as possible. Rather than letting debt and missed payments stack up, reach out to see what your options are.

Find answers to commonly asked questions about paying off credit card debt.

Paying off credit card debt can feel daunting. But with some research, an effective plan and consistency, you can get one step closer to paying off debt and improving your credit scores.

CreditWise from Capital One makes it easy to monitor your credit by showing you factors that affect your credit scores. Plus, you can use the CreditWise Simulator to see how paying off credit card debt or transferring a balance could affect your scores. CreditWise is free for everyone—even if you don't have a Capital One account. And using it won’t hurt your credit.