How to Get Out of Credit Card Debt Faster
Use the calculations above along with these proven strategies to crush your debt.
1. The Minimum Payment Trap
Credit card companies want you to make only the minimum payment. Why? Because the way compound interest works, paying just the minimum means you will be in debt for decades and pay thousands of dollars in interest. The national average credit card APR is hovering around 24%. If you only pay $35 a month on a $5,000 balance, your balance will barely drop because almost the entire payment goes toward the monthly interest charge. Rule #1 of getting out of debt: Always pay more than the minimum.
2. Debt Snowball vs. Debt Avalanche
When you have multiple credit cards, you need a strategy. The two most popular methods recommended by financial experts are:
- The Debt Snowball Method: You pay off your balances from smallest to largest, regardless of the interest rate. This gives you quick psychological "wins" that keep you motivated.
- The Debt Avalanche Method: You pay off the debt with the highest interest rate first. Mathematically, this saves you the most money and gets you out of debt the fastest. Use our calculator above to see how much interest you save by attacking high-APR cards aggressively.
3. Consider Debt Consolidation & Balance Transfers
If your interest rates are crippling your ability to make a dent in the principal balance, look into a 0% Intro APR Balance Transfer Credit Card or a Personal Debt Consolidation Loan. By moving your high-interest debt to a 0% APR card for 12 to 21 months, 100% of your payments will go directly toward the principal. Just be aware of balance transfer fees (usually 3% to 5%) and make sure you pay off the balance before the promotional period ends.