Credit Card Debt is a national problem.  Currently American households hold $712 billion in credit card debt, or $15,000 per household.  That’s enough money to buy 50 million cars.

The reasons for credit card debt go beyond simple spending. Unemployment, underemployment and unforeseen emergencies are factors that can lead to debt. Meanwhile, the longer you hold onto your debt, the more money you’re paying in interest, and the more you’re damaging your credit score.

The good news is that it’s possible to pay off credit card debt!

It can be done, but it doesn’t happen overnight. Instead it requires commitment, a long term approach, and a little professional help. In that spirit, we would like to offer you a three phase plan to start on the road to paying off credit card debt.

3 Steps to Pay Off Credit Card Debt

Step 1: Control Your Credit

how to pay off credit card debt


Spending Patterns

Where does your money really go? Instead of looking at individual purchases, start looking for spending patterns. Often your credit card will actually provide you with a breakdown online. There are also great free online budgeting tools that will analyze your spending across accounts and provide recommendations.

Helpful Hint: You’re spending $4 every day for your morning coffee. That doesn’t seem like much, but that can add up to over $1000 in savings every year.

Recurring Charges

We use our credit card to sign up for special offers, subscriptions, and memberships offering great deals and the first month free. We sign up, enjoy the free month and then forget to cancel. We forget that we signed up, but the company is still happy to keep charging us. If you’re not taking advantage of the service, or if the price has gone up, cancel it, and make sure it stays canceled.

Helpful Hint: If you haven’t used a service for six months, you’re probably not really going to use it. Stop paying for it. Chances are if they really want your business, they’ll take you back.

Shuffle Your Cards

We reach for our wallet or purse several times a day, but don’t always think about what’s in it. When we need to make a purchase, we reach for the card that is most convenient. Instead, inventory your credit cards. Look at the interest rates for each card, and leave the higher-rate cards at home. Not only are you more likely to use them less frequently, they make you less prone to theft and identity theft.

Helpful Hint: Any time you make a purchase, always reach for your debit card first. Remind yourself that when you pay with a credit card, you’re paying an additional 10 to 25 cents per dollar spent in interest.

More Than the Minimum

Here’s a secret credit card companies don’t tell you. They want you to only pay the minimum balance on your credit card debt. Usually they only charge 2 – 3 percent of your total balance. Meanwhile, the longer you leave a balance on your card, the more they can charge in interest.

Helpful Hint: If you want to get a realistic look at how much time it will take to pay off your credit card debt, try using our Debt Calculator.

Address the Interest

While some suggest paying off the credit card with the lower balance first, that should only be a priority if you’re a payment or two away. All things being equal, prioritize your higher interest cards, and try to pay them off as quickly as possible.

Helpful Hint: Legally, your credit card company is required to show you how long it would take to pay off the card at the current minimum, without making additional purchases. Often this can take 10 – 20 years.

Check Your Balances

While some suggest paying off the credit card with the lower balance first, that should only be a priority if you’re a payment or two away. All things being equal, prioritize your higher interest cards, and try to pay them off as quickly as possible.

Helpful Hint: Legally, your credit card company is required to show you how long it would take to pay off the card at the current minimum, without making additional purchases. Often this can take 10 – 20 years.

Be Careful with Consolidation

We’re often inundated with offers of low interest loans, peer-to-peer loans, or credit cards with 0% interest on balance transfers. It’s tempting to transfer balances to pay off credit card debt, but you also need to deal with the underlying issues. If you continue to use your cards, while paying off the consolidation loan, you run the risk of falling even further into credit card debt.

Helpful Hint: Keep in mind that many introductory offers are temporary. If you haven’t paid off the balance during the initial trial period, you’ll be stuck paying a higher interest rate, and you’ll be right back where you started.

Prioritize Your Payments

If the money needed to meet bills is tight, it’s ok to prioritize the order in which you pay your bills.

  1. Rent or Mortgage/Food/Basic Utilities – You can’t pay bills if you can’t live in your home.
  2. Insurance – Don’t run the risk of having an accident with a canceled policy.
  3. Credit Cards – Try to make the minimum payments.
  4. Car Payments – Especially if you need your car to get to work.
  5. Unsecured Debts – These can include doctor’s bills and anything else that doesn’t have collateral attached.
  6. Cell phones and cable – Often these services will allow some leeway before canceling.

Helpful Hint: That doesn’t mean that you should delay paying these bills longer than is absolutely necessary. If you find you’re consistently having trouble meeting your monthly bills, it may be a sign that you need to start finding ways to cut back.

Build an Emergency Fund

While it’s tempting to want to pay off credit card debt quickly, sometimes the best way to stay out of debt is to save. Try to set aside a little bit of money each month and build an emergency fund. That way if you’re faced with an unexpected emergency you can cover the costs without having to add even more debt to your credit cards.

Helpful Hint: Try transferring a portion of your paycheck into savings automatically. If you need it later in the month, you can always transfer the funds back to checking.

Establish A Budget

Establishing a budget not only helps you to understand how much you’re spending, it helps you to understand why you’re spending. For help, look at our free budgeting tools, or consider signing up for a budget analysis.

Helpful Hint: Don’t budget monthly, budget by paycheck. If you’re paid weekly, bi-monthly, or monthly, factor that into your planning.

Step 2:  Lower Your Expenses 

pay off credit card debt by lowering your expenses


Pay off credit card debt by lowering your expenses

We’ve talked about how to manage your credit card debt. Now it’s time to start looking at how to save. Don’t try to drastically change your life overnight. If you do, you’re likely to get frustrated and fall back into your old patterns. Use what you’ve learned in Phase One to make deliberate changes that you can live with. Who knows, you may even find that you enjoy it!


As you’re examining your spending habits, you’re likely to see areas where you can save money by doing things yourself. Paying for lunch at work every day? Try making your own. The same mindset can be applied to every aspect of your life, and chances are that someone has thought of it.

Helpful Hint: Hundreds of lifestyle experts and frugality bloggers are offering tips and tricks that can save you money while improving your quality of life.

Buy It Used

Need a new appliance or home furnishing? Before you buy it new, look on Craigslist and other re-seller sites. You can probably find the exact thing that you need for less, and no one will be the wiser.

Helpful Hint: Used cars get a bad-rap, but many dealerships offer Certified Pre-Owned cars that come with limited warranties and service plans. The only thing missing is the new car smell.

Spend to Save

Remember in Phase One where we talked about the price of your daily coffee? Instead of spending $100 a month on daily lattes, you could invest one month’s coffee budget into a gourmet coffee machine and premium packaged coffees, and still save for the rest of the year.

Helpful Hint: Remember, once you commit to the investment, you have to stick with it. If you buy the gourmet coffee machine and still buy the high-priced lattes, you’re simply wasting $100.

There’s an App for That

Your smartphone can provide you with all kinds of tools to help you save on daily expenses. From apps that provide instant coupons, to apps that show you where to find the cheapest gas, there are lots of small ways to save that can add up over time.

Helpful Hint: Carefully research apps and read reviews before buying. Also make sure that free apps are really free, and don’t require extra purchases to be effective.

Cut the Cord on Cable

The cable bill is one of the fastest growing home expenses in America. By 2020 it could easily reach $200 a month. No one wants to give up their favorite TV shows, but by cutting the cord and switching to streaming services, you can save every month.

Helpful Hint: Want to learn more? has a free webinar and 2 free e-books that can help get you started.

Entertain Yourself

Entertainment may be the single greatest expense that you can control. Look at your monthly entertainment budget and try to cut it in half. Then cut it in half again. Try to emphasize the quality of the experience over the cost.

Helpful Hint: Instead of taking the family to the Cineplex over the summer, look for free outdoor screenings or other events in your community.

Step 3: Get Help (You’re Only Human)



No one can do everything by themselves. Sometimes the bravest thing we can do is ask for help. That’s why non-profit services like exist. We have solutions to help you pay off credit card debt and are available to customers in every state except Kansas, Montana and Utah. We have a proven track record of helping people take control of their finances and create a better financial future.

Credit and Budget Counseling

This is a free service that we offer at, and it’s the starting point in any plan to effectively manage your debt. We take the time to get a clear picture of your income and expenses, employment, and any recent hardships. Then we look at your credit card accounts and other debts, and assess your payment history

We may be able to provide you with guidance on how to find cost savings, budget your money more effectively, and help you come up with a strategy to pay down your debt.

This is also required education that everyone must go through if they decide to use a Debt Management Plan or bankruptcy.

Debt Management Plan

If you’re struggling with debt, and if a credit counselor recommends it, you might consider a Debt Management Plan.

A Debt Management Plan allows you to pay off your credit card debt at a lower interest rate, over a fixed period of time – usually three to five years. You still hold the credit card in your name, and own the debt, but the credit counseling service serves as an intermediary to ensure that all your debt is paid on time, and according to the agreed-upon schedule. If you don’t meet the terms of the program, you go back to paying at the original terms.

Debt Management Plans aren’t arbitrary; they were created by the financial industry to help consumers who are dealing with financial hardship. That means there’s no direct impact on your FICO score.

As an example, in November 2015 the average credit card monthly payment for a Debt Management Plan client dropped from $954 to $606, and their interest rates dropped from 24.90% to 1.90%. In fact, we’ve had people successfully pay off debts as large as $90,000 in 5 years.

Learn how’s Debt Management Plan works:


For most of our clients, bankruptcy isn’t an issue, and we only recommend it in situations where all other options have been exhausted. However, in cases where a client is facing an insurmountable debt, we can recommend a bankruptcy attorney.

Ready to Take Your First Step Toward Paying Off Your Credit Card Debt?

Paying off credit card debt may seem insurmountable, and often it’s easier to ignore the problem than to face it. But the fact is, if you don’t face the problem, over time it will only get worse, and will continue to hurt your financial future

Like any kind of long-term problem, the first step is for you to make the choice to take action. Once you do, you may be surprised how many people out there want to help you cut your credit card debt and get back on the right track to a great financial future!

If you’d like help, click to schedule a free credit card counseling session with

Credit Card Debt

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