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Our goal here at Credible is to give you the tools and confidence you need to improve your finances. Although we do promote products from our partner lenders, no one dictates what we write on our blog. All guidance given is unbiased and all opinions are our own.

If you have credit card debt, you’re not alone. Americans have over $830 billion in outstanding credit card balances, according to Experian.

Having a large credit card balance could prevent you from qualifying for a new car loan or even a mortgage. It could also make it more difficult for you to get out of debt as interest piles up, increasing your total amount owed.

Here’s how to get out of credit card debt in five steps:

  1. Consolidate your debt with a personal loan
  2. Transfer your credit card balance to a new card
  3. Use the debt avalanche method
  4. Make extra payments
  5. Contact a credit counseling agency for help

1. Consolidate your debt with a personal loan

Credit cards usually have high interest rates — the average credit card interest rate is 16.97%. With such high rates, a large portion of your payments go toward the principal rather than interest. To make your payments more effective, consider consolidating your debt with a personal loan.

With a credit card consolidation loan, you get a loan from a bank, credit union, or online lender for the amount of your credit card debt. Then, you use that loan to pay off your credit cards. Personal loans tend to have much lower interest rates than credit cards, so you’ll save money over time. Plus, debt consolidation loans have fixed monthly payments and an end date, so you’ll know exactly when you’ll pay off that debt.

Use a personal loan calculator to estimate what your payments would be with your desired loan term.

Learn More: Debt Consolidation Loans

2. Transfer your credit card balance to a new card

If you have good credit, another strategy you can use is a credit card balance transfer. A balance transfer is when you move your credit card balance to another credit card with a lower interest rate. There are many credit cards on the market that offer 0% introductory APR for 12 to 18 months, giving you a year or more to pay down your balance without paying interest.

With 0% APR, your payment will go completely toward the principal for the length of the promotional period, which will help you save money. One of the drawbacks to this approach, however, is that having a high credit utilization could impact your credit until the new credit card is paid off. You should also pay attention to any balance transfer fees you might have to pay — typically around 3% of the balance.

3. Use the debt avalanche method

If you have multiple credit cards with a balance, a good way to pay off your debt is to use the debt avalanche method.

With this strategy, you list all of your debt from the one with the highest interest rate down to the lowest. You continue making the minimum payments on all of your credit cards. However, any extra money you have goes toward the credit card with the highest interest rate.

Once you pay off the most expensive credit card, you roll the payment you were making on that one toward the card with the next highest interest rate. You continue this process until all of your credit cards are paid in full.

4. Make extra payments

If you stick to the minimum payments required on your credit cards, it can take you years to pay off your debt. To really get rid of those balances, you need to pay more than the minimum required.

To find extra money to put toward payments, consider these options:

  • Cut expenses: Create a budget and look for areas where you can cut back. Perhaps you could reduce your living expenses by adding a roommate, downsizing to a smaller apartment, or cooking at home instead of dining out.
  • Boost income: There are only so many expenses you can cut from your budget, so boosting your income is key. Consider working overtime, doing freelance work, or picking up a side hustle to increase your monthly earnings. If you put that extra income toward your credit card balances, you can become debt-free months earlier.
  • Sell unused items: You likely have unused clothes, toys, electronics, or books in your home. Turn that stuff into cash by selling it on sites like eBay or Poshmark. If you use the earnings to make extra payments on your credit cards, you can save money over time.

5. Contact a credit counseling agency for help

If you’re struggling with debt and can’t get ahead, it’s okay to ask for help. A reputable credit counselor from a non-profit credit counseling agency can assist you with creating a budget, coming up with a repayment plan, and can even work with your creditors to lower your interest rates.

The United States Trustee Program has a list of credit counseling agencies you can use to find a reputable agency.

What to do if you’re really struggling with credit card debt

In some cases, your debt may be so large that it may feel impossible to pay it down. If that’s the case, there are other options to consider:

Try a debt management plan

Under a debt management plan (DMP), you’ll work with a credit counselor. Each month, you’ll make a deposit to the credit counseling agency and they will allocate it to your creditors for you. The credit counselor will work with your creditors to potentially lower your interest rate or lower fees. In general, it will take about 48 months to pay off your debt with a DMP.

Consider debt settlement

Debt settlement is a risky process where you work with a company to settle your credit card balances. Debt settlement companies usually are for-profit organizations that charge hefty fees for their services. They will work with your creditors to convince them to settle for a smaller amount than you actually owe.

Debt settlement companies usually require you to stop making payments for months, which can wreck your credit. You’ll also need to come up with a large lump sum payment to settle your debt. Finally, there is no guarantee that your creditors will agree to the debt settlement, so you may end up paying a fee with no results.

Only choose bankruptcy as a last resort

If your debt is insurmountable, declaring bankruptcy may be a good option for you. When you declare bankruptcy, the government removes your liability for your existing debt. Depending on what type of bankruptcy you utilize, you may even be able to keep some of your property, like your home or your car.

Bankruptcy is a serious decision. It can destroy your credit, and can remain on your credit report for seven years — and the process can be time-consuming and costly.

What not to do if you have credit card debt

If you’re struggling with your debt, you may be tempted to pay off your debt by taking out a loan from your 401(k) or tapping into your home’s equity. However, both of these strategies are risky.

Take out a 401(k) loan

If you take out a 401(k) loan, you lose out on your money’s ability to grow. But worse, you have to repay the loan with after-tax dollars. And, if you leave your job or are laid off, you have to repay the loan in full within 90 days of your departure.

Tap into a home equity loan

A home equity loan can seem like a great way to access low-interest cash. However, there’s a catch: home equity loans are secured, and your house serves as collateral on the loan. If you fall behind on your payments, you could lose your home.

You can get out of credit card debt

While interest charges can make repaying your credit card debt more challenging, it’s not impossible. By coming up with a debt repayment strategy, cutting your expenses, and consulting a professional, you can figure out how to get out of credit card debt and move on with your life.

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About the author
Kat Tretina
Kat Tretina

Kat Tretina is an authority on student loans and a contributor to Credible. Her work has appeared in publications like the Huffington Post, Money Magazine, MarketWatch, Business Insider, and more.

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