5 Strategies to Eliminate Credit Card Debt Permanently

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Over the past few years, Americans have seen their credit card debt rise significantly due to increasing prices and interest rates. The average credit card debt per borrower is now $6,380. With more people carrying larger debts, there’s growing concern about the possibility of missing payments. About 13% of Americans worry they might face this issue in the next three months, a concern that has been steadily increasing throughout 2024.

If you’re among the half of Americans who don’t pay off their full credit card balance each month, shifting to a debt-free status can be tough. However, these five strategies, endorsed by financial planners and credit experts, can guide you toward paying off your credit card debt and reaching a $0 balance.

1. Stop Spending and Pay More Than the Minimum

To eliminate credit card debt, you first need to stop adding to it. Credit expert Beverly Harzog, author of *The Debt Escape Plan*, advises using cash or a debit card instead of credit. This will not only prevent further debt but also help you track where your money goes, making it easier to cut unnecessary expenses and free up funds to pay off your debt.

Paying more than the minimum monthly payment is a straightforward way to reduce credit card debt faster. Minimum payments cover only a small part of your total debt, allowing interest to accumulate on the remaining balance. By increasing your monthly payment, you can pay off your debt quicker and save on interest. For example, on a $10,000 balance with a 22% interest rate, increasing your $285 minimum payment by $50 can make you debt-free 13 months sooner, saving you $1,558 in interest.

2. Use the Snowball or Avalanche Method

Instead of spreading extra payments across all debts, focus on paying off one debt at a time to stay motivated and feel a sense of progress. Two common approaches are the snowball and avalanche methods. Both involve paying extra on one card while maintaining minimum payments on others. The snowball method targets the smallest balance first for quick wins, while the avalanche method tackles the highest interest debt first for cost savings.

Certified financial planner Crystal McKeon explains that the snowball method can help maintain motivation by showing progress through small victories. Paying off smaller balances can also improve your credit score faster. However, the avalanche method is financially smarter as it focuses on high-interest debt, reducing financing costs. Alternatively, you can create a custom approach, like the blizzard method, which combines both strategies.

3. Apply for a Balance Transfer Card

Transferring your credit card balances to a card with a lower interest rate is a cost-effective way to manage debt, according to Harzog. Many cards offer 0% introductory financing, allowing you to pay off your debt without accruing interest for a set period, usually 12 to 21 months. However, balance transfer cards often require a credit score of 660 or higher and may come with a transfer fee. Ensure you pay off the balance before the promotional rate ends to avoid high interest.

Be cautious not to accumulate new debt on your paid-off cards or the balance transfer card, as this can lead to further financial trouble.

4. Simplify Debts with a Consolidation Loan

Consolidating credit card debts into a single loan can reduce interest rates, lower monthly payments, and provide structured repayment terms. This method can prevent overspending and help you adhere to a repayment schedule. A loan with a fixed interest rate is easier to budget for and might improve your credit score. Strong credit scores can secure lower interest rates, making consolidation an attractive option for many.

Homeowners with significant equity can consider a home equity loan, which usually offers lower interest rates. However, be aware of origination fees and the risk of foreclosure if repayments are missed.

5. Get Expert Help

If you’re struggling with credit card payments and can’t qualify for balance transfer cards or loans, consider seeking professional help. Start by asking your card issuer for lower interest rates or promotional offers. For more serious situations, contact your card’s hardship department and explain your circumstances to negotiate better terms.

Credit counseling services can provide financial guidance and help you manage debt through a debt management plan. These services often offer a free initial session but charge a monthly fee for ongoing assistance. Alternatively, a debt relief company can negotiate settlements with creditors, though this strategy can impact your credit score and involves risks.

To avoid scams, choose companies accredited by the American Association of Debt Resolution and avoid those demanding upfront fees.