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How to Pay Off Credit Card Debt

How to Pay Off Credit Card Debt

By Melina Duffett • December 23, 2019

If you’re in credit card debt, you’re not alone — 41.2% of all American households carry some sort of credit card debt1. When it comes to paying off all of your credit cards, it may seem overwhelming at first, but we’ve got the right strategies, tools and solutions for you to establish a plan for success.

Follow the steps below to manage your credit card debt:

1. Negotiate interest rates: First, try calling each of the credit card companies you owe to see if they’re willing to work with you and lower your interest rate. There’s no harm in asking, and you may even be able to negotiate a balance transfer from your higher interest rate cards to your lower interest rate ones.

2. Write it down: Create a spreadsheet with the total amount of credit card debt you have, sorting it by the amount of debt on each card, the interest rate on each card and each card’s monthly minimum payment.

3. Choose and optimize your payoff method(s): Once you’ve determined how much you owe, it’s time to choose exactly how you’ll reach your goal. There are several different options when it comes to paying off credit card debt. Let’s take a look at each of them in order to determine which method of debt repayment will work best for you:

Avalanche vs. Snowball Methods of Debt Repayment

When it comes to paying off credit card debt, the snowball method and the avalanche method are the most common strategies used to pay off your credit cards for good.2

  • Avalanche Method: If you want to use the avalanche method to pay off credit card debt, you’ll make the monthly minimum payments on all of your credit cards, and use any remaining money to pay off the debt with the highest interest rate first. Once the card with the highest interest rate is completely paid off, you’ll then allocate additional funds to the card with the next highest interest rate and continue this pattern, ending with the card with the lowest interest rate, until all of the cards are paid off. The avalanche method is mathematically superior to the snowball method in that you are saving money on interest by getting rid of the highest interest debts first.

  • Snowball Method: Sometimes, even if something makes mathematical sense, it just doesn’t feel right psychologically. This is where the snowball method, a long-time favorite of money guru Dave Ramsey, comes in.3 With the snowball method, you pay the minimum monthly payment on all of your debts, and then devote any remaining money to the debt with the smallest balance.

Even though the debt with the smallest balance may not have the highest interest rate, by paying off something in its entirety, you’re mentally setting yourself up for success by giving yourself small wins and continuous motivation throughout the debt repayment process.

For an easy, at-a-glance way to remember each debt repayment method, take a look at the table below:

Chart Credit-Card-Repayment-Methods

So, Avalanche or Snowball — What’s Best for You?

If you’re debating which repayment method is right for you, do the math by using a Debt avalanche Calculator or Debt snowball Calculator. Sometimes, you may only pay a few hundred more dollars over the long term with the snowball method, so it could be worth it in order to keep your motivation high and stick to your debt repayment plan. But, if the difference is thousands of dollars, you may want to take the more mathematical approach and start with the avalanche method.

When Avalanches and Snowballs Aren’t Enough

Sometimes, particularly if you were unable to negotiate your interest rates, taking out a personal loan to pay off your credit cards makes sense. Let’s take a look at why taking out a personal loan could be a good idea.

Taking Out a Personal Loan to Pay Off Credit Cards

By taking out a personal loan to pay off your debt, you’re transferring several credit card balances into one new loan. This creates one fixed monthly payment to make, which could potentially save you money on interest over time.

When you have multiple credit card payments with various due dates to make, it can be easy to miss a payment, but with just one loan, you’re mitigating that risk and consolidating everything into one easy-to-make payment.

Additionally, if you were to miss a payment on one of your credit cards, you could receive an interest rate increase, which would impact your monthly payments until all of the debt is paid off. With a personal loan that offers fixed interest rates, this would never happen. Even if you were to miss a personal loan payment, you may receive a one-time fee versus an increased interest rate that would impact the amount you pay over time. Ultimately, a personal loan could save you money and make it easier to budget each month.

Establish a payoff date

Once you determine how you’re going to pay off your credit card debt — the avalanche method, snowball method or a personal loan — you should calculate the month and year that you’ll be able to pay off your debt in its entirety.

Create a realistic plan based off how much you owe, your interest rates and your income and expenses to determine when you’ll be free of credit card debt. Write down the date somewhere you’ll see everyday to remind yourself to keep working toward your goal and not waste money on frivolous expenses.

Stay Debt Free

Once you decide to pay off your credit cards, choose a method and accomplish your goal. It’s important to stay debt free — forever. Take a look at some healthy financial habits to adopt to start living your debt-free life!


The information in this article is provided for general education and informational purposes only, without any express or implied warranty of any kind, including warranties of accuracy, completeness or fitness for any particular purpose. It is not intended to be and does not constitute financial, legal or any other advice specific to you the user or anyone else. The companies and individuals (other than OneMain Financial’s sponsored partners) referred to in this message are not sponsors of, do not endorse, and are not otherwise affiliated with OneMain Financial.