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How to Pay Off Credit Card Debt

Right now, America’s credit card debt is sitting at $986 billion.1 Yep, you read that right—billion. And as of fall 2022, the average credit card debt was $5,910.2 Help us, Lord!

Listen, if credit card debt is stopping you from paying your bills or keeping you up at night, I see you. I remember when I used to keep my phone on silent and turn it screen-side down so no one saw all the missed calls from credit card companies. But it doesn’t have to be that way.

It’s time to drop it like it’s hot! (Sheesh, people, I’m talking about dropping your debt!) Here’s how to pay off credit card debt fast—one step at a time.

How to Pay Off Credit Card Debt

Debt sucks. Especially credit card debt. If you’re not careful (and sometimes, even if you are careful), one missed payment can turn into a growing pile of interest and calls from collectors. But that changes today.

Here are seven steps you can take to start getting rid of credit card debt once and for all.

1. Stop using credit cards.

First things first. Just like any toxic relationship in your life, you’ve got to break up with your credit cards. Y’all think I’m playin’? Think about it. They were the reason you got into this mess in the first place. And they will only keep pulling you under if you let them.

Here’s the deal: You can live without credit. Let me repeat that: You can live without credit. As a matter of fact, you will live your best life without credit. Because when you cut it out (not just credit cards, but borrowing money in general), you’ll actually reach your money goals faster.

For the longest time, I remember my husband Sam and I weren’t too worried about having credit cards. We had that one card we kept around “only for emergencies.” But somehow, every month, that thing ended up with a balance on it that we had to pay off. (Funny how that happens.) It wasn’t until we decided to really take control of our finances and cut up that final credit card that we were truly able to move forward faster than ever.

So, take those cards out of your wallet and tell them, “You’re bad for me, my finances and my future. It’s over.” Then take those kitchen scissors and cut them up so you won’t be tempted to swipe them ever again.

Don’t put them in a block of ice. Don’t put them in your sock drawer. Cut. Them. Up. And cut them off—meaning close the dang account.

2. Save an emergency fund.

If getting rid of those credit cards freaks you out because you use them “for emergencies,” then it’s time to come up with a new plan. Borrowing money for emergencies only leads to more debt and stress. What you need, my friend, is an emergency fund.

Start by saving $1,000 as fast as you can. Keep that money in your savings account as a buffer between you and those “life happens” moments (you know the ones) while you focus on paying off your debt. And while no one likes to pay for emergencies, using your own money means you won’t have to pay interest on that brand-new AC unit.

I know $1,000 doesn’t sound like a lot for emergencies, but it’s just a starter fund. After you pay off your debt (more on that in a minute), you’ll want to build up that emergency fund to be able to cover at least 3–6 months of expenses.

3. Use the debt snowball method.

Okay, so how do you actually pay off that credit card debt? The method I used to get out of debt—and what I teach others to follow—is the debt snowball method. Here’s how it works.

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Step 1: List all your credit card balances from smallest to largest. (If you’ve got other debt, like car loans, personal loans or student loans, include those in the list too). Don’t worry about the interest rates right now—just focus on the balances. Start by paying minimum payments on all your debts but the smallest one.

Step 2: Throw as much money as you can at your smallest debt. Knock it out as fast as possible! (I’ll give you some tips on how to do that in a minute.) When that first debt is gone, take what you were paying on it and put it toward the second-smallest debt, while still making minimum payments on the other debts.

Step 3: Keep doing that until all your debts are gone! Remember, with each balance you pay off, the more money you have to throw at the next debt—like a snowball rolling downhill. It’s unstoppable. You’re unstoppable. That credit card debt (or any debt) doesn’t stand a chance.

Pro tip: Don’t forget to close your credit card accounts after you pay them off. Then you can dance like nobody’s watching (go ahead and drop it like it’s hot). You did it!

Okay, we know what you’re thinking: What about those interest rates? I get it, but what you really need right now is a quick win. And the best way to start off strong and stay motivated is to knock out one of your debts ASAP and feel that win. Trust me, money is mostly about mindset, not math. Once you get that first debt behind you, you’ll be on fire and ready to tackle the next. This stuff really works.

4. Get on a budget.

A budget is like a toothbrush—everyone needs one, and without it, things get ratchet real quick. If you really want that credit card debt gone, you need a plan for your money—I’m talking every single dollar. It’s up to you to tell your money what to do and where to go. And in this case, that’s straight toward your debt.

So, get on a budget! In fact, you can go ahead and create a free budget right now with EveryDollar. Start by listing your income (everything coming in). Then write out your monthly expenses. Take care of your Four Walls first (that’s food, utilities, shelter and transportation). Then list out any other expenses you may have. And be honest about what you’re actually spending each month (eating out, trips to the nail salon, streaming services).

Once you’ve got all your expenses accounted for, subtract them from your income. If you have money left over, throw it at your smallest debt! If you’ve got a negative number, it’s time to tighten up those other budget lines until you have a zero-based budget. (That means your income minus your expenses equals zero and every dollar has a job).

5. Cut expenses.

Okay, you created your budget. Now it’s time to do some adjusting. Take a good, hard look at everything you listed. What expenses can you cut? Yeah, it’s probably going to hurt, especially if you’re used to just charging things to a credit card. But remember, your goal is to get out of debt. And that’s going to take some discipline.

So, ask yourself, what extras can you live without in this season while you pay off credit card debt? If you need some ideas of where to start cutting, ya girl has got a few: restaurants (eating out will eat into your budget big time), entertainment (sports games, going to the movies), subscriptions you don’t use regularly (ahem, that gym membership), cable or streaming subscriptions (do you really need all of them?), and those random trips to Starbucks. Every little bit you cut out of your life adds up to get you out of debt faster.

Now, just because you’re spending less money, it doesn’t mean you can’t have fun. You just have to get creative with some budget-friendly fun! It won’t be easy, but these sacrifices you’re making right now will make a huge difference for your financial future.

6. Lower your bills.

Now that you’re putting every extra dollar toward your debt snowball, it’s time to start freeing up even more cash by lowering your monthly bills and saving money in the categories you can’t cut completely. You can do this by watching your electricity use, meal planning (my girl, Rachel Cruze, has a great guide for that), or buying generic brands

Make enough small changes, and you’ll feel like you got a raise. Just make sure you’re also intentional about putting your freed-up money toward paying off debt—not wasting it on unnecessary or impulse purchases.

7. Earn extra income.

You need to get control of your spending if you want to pay off debt, but it also helps to get more money coming into your budget by earning some extra dough. Start a side hustle. Drive for Uber or Lyft. Deliver groceries with Shipt or Instacart. Resell your stuff on Poshmark or eBay.

Use the skills you have to tutor, give lessons, or take freelance gigs. Maybe you need to take on a part-time job or work extra hours at your current one. Or you could do what I did and train dogs or sell cakes. Either way, you better be working! Will it take more of your time and energy? Yes. But will it help you pay off your debt faster? Most definitely!

What’s the Best Way to Pay Off Credit Card Debt Fast?

So, I told you how the debt snowball method works. Not only is it the best way to pay off credit card debt, but it’s also the fastest.

How? Well, the debt snowball is all about motivation and momentum. Instead of trying to tackle everything at once, it gives you a game plan to attack your debt—one credit card at a time. That’s why you start with the smallest balance first.

The debt snowball helps you knock out each debt faster, which frees up more money to knock out the rest. Plus, each win will motivate you to keep attacking your debt with focused intensity. And that’s the key to getting out of debt for good.

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Avoid These Methods to Pay Off Credit Card Debt

Paying off debt is never easy (and anyone who says it is might be trying to scam you). There are plenty of “quick fixes” out there, but most of them will only add more money problems to your plate.

So, let’s talk about these other methods (aka traps) people recommend to pay off credit card debt—and why you should steer clear of them.

  • Credit Card Balance Transfer: This is when you move all your credit card debt onto one new credit card that has a low introductory interest rate. You’ll also get hit with transfer fees and risk going blind reading the fine print. Okay, that last part is an exaggeration—but there’s no exaggerating that huge spike in your interest rate when you make just one late payment or the introductory period expires. This “solution” to your credit card debt is like trading a bunch of problems for one even bigger problem. Don’t. Do. It.
  • Personal Loan: If you’re already in credit card debt, you might be tempted to take out a personal loan to pay it off. But taking out more debt to cover your other debt only traps you further in the debt cycle. Instead of just moving your debt around, you need to deal with it head on.
  • Debt Consolidation: This is basically a loan that combines most of your debts into one single payment. This sounds like a good idea until you realize that it actually extends the length of your loan, which means you’re in debt for way longer. And the low interest rate that seemed too good to be true at first usually goes up over time. 
  • Debt Settlement: Debt settlement companies will charge you a fee and promise to negotiate with your creditors or reduce the amount you owe. But they usually just take your money and leave you drowning in the debt you already had—plus all the new late fees that built up when no one was paying on your balance.
  • 401(k) Loan: Unless you’re facing bankruptcy or foreclosure, never ever ever borrow from your 401(k) to pay off your debt. I repeat—never borrow from your 401(k)! Not only will you get hit with penalties, fees and taxes on your withdrawal, but you’re also stealing from your own future. And I know y’all know better than that!
  • Home Equity Loan: Also known as a HELOC, this kind of loan borrows against the equity you’ve built up in your home and uses your house as collateral. In other words, a HELOC trades what you actually own of your home for even more debt—and puts you at risk of losing your house if you can’t pay back the loan on time. Don’t get a HELOC. Period.
  • Debt Avalanche: Unlike the debt snowball, the debt avalanche is a method that focuses on paying off the debt with the highest interest rate first. But the problem with this method is rooted in motivation. Remember: Paying off debt is less about math and more about behavior. With the debt avalanche, your first targeted debt might be a huge balance that could take a long time to pay off. But you need quick wins that encourage you to keep going! The debt avalanche sounds nice in theory, but it takes too dang long to see real progress. 
  • Money Borrowed From Family and Friends: I don’t care who you are or how rich Uncle Boo Boo might be, borrowing money from family and friends is a recipe for drama. Not only will it make Thanksgiving dinner extremely uncomfortable, but it also turns your loving Uncle Boo Boo (or your friend) into a debt collector. And no family needs that extra tension—especially around the dinner table.

Ditch Credit Card Debt for Good

Okay, so I’ve walked you through how to pay off your credit card debt. But cutting up your credit cards is only one piece of the puzzle. If you really want to get out of debt and stay out of debt, you’re going to have to change the way you handle money.

Financial Peace University (FPU) has helped millions of people take control of their money. And now it’s your turn! This course will teach you the proven plan to pay off all your debt, save for emergencies, and build wealth for your future—without having to play the credit game.

Financial peace isn’t just for “those people.” It’s for you. And you’ve got what it takes to pay off credit card debt and make progress with your money. Get started right now with FPU!

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Jade Warshaw

About the author

Jade Warshaw

Since paying off over $460,000 in debt with her husband, Sam, Jade Warshaw has been coaching others on how to go from the angst of debt and payments to the ease of financial peace. As a co-host of The Ramsey Show, the second-largest talk radio show in America, Jade helps people pay off debt by teaching them to shift their mindset and actions around money. Jade is a Ramsey Solutions Master Financial Coach, debt elimination expert and debt-free entrepreneur. Learn More.

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