5 Smart Strategies to Eliminate Your Credit Card Debt

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Minimum payment due, reads the box on your credit-card statement. What an enticing idea: Pay a small amount and you’re off the hook for the whole bill—for a while, anyway. Alas, as the more than 45% of Americans who carry a balance every month know, that rotating charge usually comes back to bite you. For example, a cardholder who owes $15,956—the average amount of debt per household, according to Ben Woolsey, the director of marketing and consumer research for CreditCards.com, a credit-card comparison site, will end up shelling out an additional $11,000 in total interest if she pays only the minimum each month.

You may have had a very good reason for running up high-interest debt: Maybe you had to make some unexpected big-ticket purchases or lost a job or endured an illness. But regardless of the cause, ridding yourself of that balance should be your top financial priority. “You need an action plan to help you work at reducing and eventually eliminating what you owe,” says Gail Cunningham, a spokesperson for the National Foundation for Credit Counseling, a nonprofit organization. Here are several ways to create one for yourself.

1. Target just one card first. If you’re carrying balances on multiple cards, it’s a long slog to wipe out those debts. So give yourself a boost of instant gratification right from the start, says Mary Ann Campbell, a certified financial planner in Little Rock, Arkansas. Ask yourself: What short-term financial goal will make me feel as though I’m making meaningful progress on debt reduction?

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If your answer is “Having one card totally paid off,” then throw as much money as you can toward the card with the lowest balance first, says Curtis Arnold, the founder of CardRatings.com, a credit-card comparison site. (Yes, do this even if you need to pay only the minimum on your other cards in the meantime.) If your answer is “Boosting my credit score,” then tackle the card with the highest utilization rate (that’s your balance divided by the card’s limit). “Since your score takes a hit if you use more than 20% of your available balance, bringing the utilization rate down just 20% could significantly increase your score,” says Arnold. And if your answer is “Paying less in interest,” then the tried-and-true method is to pay off the card that has the highest interest rate first.

2. Ask your creditors for lower interest rates. Often a simple phone call to the issuer is all it takes to get a reduced rate—provided that you have good credit (a score of 730 or higher) and you are a long-term customer who makes payments on time. You could get a percentage point or two shaved off, which can add up to hundreds of dollars saved annually. One tip to try: “If you’ve been offered a lower rate by a competitor, tell the customer-service rep,” says Bill Hardekopf, the CEO of LowCards.com, a credit-card comparison site. “There’s a chance they’ll match the offer.”

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3. Transfer your balance (cautiously). It’s tempting to move a balance from a card with a high interest rate to a card with a substantially lower one (find one at Bankrate.com). And potentially that’s a smart move; you can save hundreds of dollars a year. But be careful: You should transfer a balance only if you’re committed to paying off the debt within an introductory low-interest-rate window (which typically lasts 12 to 18 months after the first billing cycle closes) and to making monthly payments on time, says Arnold. Otherwise your rate could skyrocket, possibly ending up higher than the one you just got rid of. (Important: You should also avoid making any purchases with the new card, as sometimes the low interest rate won’t apply to them.) In addition, know that you’ll probably be charged a balance-transfer fee, which is usually about 3% to 4% of the total amount transferred. (To calculate how much this will cost you, go to smartbalancetransfers.com.)

4. Use a peer-to-peer lender. In an ideal world, you would pay off your credit card in full and be free and clear. But if you can’t do that, consider borrowing money to pay off your card from a peer-to- peer lender, such as LendingClub.com or Prosper.com. These secure sites offer loans with fixed interest rates that can be 20% to 30% lower than most credit cards, meaning you could save hundreds of dollars in interest on your debt, says Lynnette Khalfani-Cox, a cofounder of AskTheMoneyCoach.com, a personal-finance site. If you have a job and a good credit score, you may qualify to make an online loan request for up to about $25,000.

5. If you’re really strapped, make two minimum payments each month. Card issuers typically charge interest on a daily basis, “so the sooner you make a payment, the faster your average daily balance is reduced, which translates into fewer dollars in interest that you ultimately pay,” says Gerri Detweiler, the director of consumer education for Credit.com, a personal-finance website. If you’re on a tight budget, go ahead and pay the minimum due each month, then try to make the same payment again two weeks later. Keep making a payment of the initial minimum-due amount twice a month until your debt is paid off. (To keep track, put a reminder on your calendar.) Case in point: Say you charged $2,000 on a card with a 17% interest rate. If you make only the minimum monthly payment (which is about 2% of the balance), it will take more than 21 years to pay off the balance. But if you make an additional payment of the original amount two weeks later, you will be debt-free in less than three (!) years.

This article was originally published in Real Simple magazine. Subscribe here.


I only have one issue with using one card to pay off another (balance transfer). When you started out, you had 500.00 in debt on the card. After several months of making minimum payments, being late a couple times and accruing some late fees and penalties, you now owe closer to 1000.00. If you deal with the original creditor, you can often get the late fees and penalties waived, even after a few months. But if you transfer a balance, you have just turned the negotiable part of your "debt" into hard cash that one lender has given to another and now you are right back where you started.  If you are already hemorrhaging money and your credit is dinged up, don't make it worse, work with what you already have.

What upsets me the most is that there isn't a whole lot of information out there for people that are in the process of losing their shirts, but aren't quite there yet.  I have been using a guide called Weathering Debt to help me figure this stuff out and deal with collections and creditors while I get my finances back together. It offers far more information, has sample letters and explains how the laws work to protect us.  If you are reading this, just do a google search for the name of the book and you can find it in a bunch of places.  I got mine at Amazon for my kindle.  Hope this helps someone!


Cutting up your credit cards is step #1. The second step should just be cutting all your expenses down to nothing. I would first look at your insurance costs. They are a huge killer in this country... especially auto. I would look to bring auto insurance payments down to around $25/month (take a look at 4AutoInsuranceQuote)​.. I would also look to bring your gas/fuel costs down by using an app like GasBuddy (it can help you fill up for less than $20). Once you finally got your spending under control, you'll realize that you can start paying off your debt FAST.


You have to save more but you have to invest the money that you save because if you don't,inflation will eat it up. Many people think of investment as risky and costly but it is far from it! you have to work smarter not harder!