How to Pay off Credit Card Debt: 7 Proven Strategies

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If you carry credit card debt, then you are not alone.

Did you know that nearly half of America carries credit card debt?

the millennial money woman blog post "47% of Americans carry credit card debt"

Source: CNBC

And, to make matters worse, the recent COVID-19 pandemic accelerated the cost of living, and cardholders have added more to their balance.

But, there is good news.

I’ve created a step-by-step guide on how to pay off credit card debt so you can find financial freedom

Keep reading. 

Sneak Peek: Best Programs to Help Pay off Credit Card Debt

Best Credit Card Payoff App

If you’re ready to start paying off credit card debt, then you’ve come to the right article.

Below are the 7 strategies you can implement today to start paying off debt:

7 Ways to Pay off Credit Card Debt Fast

Let’s kick things off with strategy #1.

how to pay off credit card debt strategy 1: create a budget

Strategy #1: Create a Budget

If you find yourself swimming in debt, it’s time to have a look at your spending.

A budget is the perfect tool to help you get a better overview of how much money you are spending each month and how you are spending that money. 

One of the best budgeting tools out there is YNAB [aka You Need A Budget].

YNAB is an online software program that breaks down your spending, helps you target spending goals, and gives you some pretty neat visuals to go along with the process.

Related: You Need a Budget Review

The first thing you’ll want to do when you start a budget is figure out your:

  • Needs
  • Wants
  • Wishes

Below are some examples:

Needs Wants Wishes


Eating Out



Going to the movies

New car

Utility bills

Shopping at the mall

Donating to charity

It’s important you sort your spending into these 3 categories so that you have a better idea of where you can cut out your spending as you try to pay off your credit card debt.

Personally speaking, if I’m paying off credit card debt, I would cut out every expense under the “wants” and the “wishes” category. 

Only stick to what you actually need – which is the “needs” category.

To live debt-free, you may have to adopt a lean life.

By “lean life,” I mean you’ll likely have to:

  • Cut out any excess “fat”
  • Spend less than you earn
  • Consider increasing income

A budget is like a millionaire planning guide that helps you get from Point A (where you are now) to Point B (your desired outcome).

I am a big believer in the following budgeting rules of thumb:

Type of Monthly Expense Expense Examples Rule of Thumb

Monthly Housing Debt

- Rent
- Mortgage
- HOA fees
- Home insurance

< 28% of gross monthly income

Total Monthly Consumer Debt

- Car loans
- Mortgage
- Credit cards
- Student loans

< 20% of net monthly income

Total Monthly Debt Payments

- Lines of credit
- Cash advances 
- Credit card debt

< 36% of gross monthly income

Since these are merely rules of thumb, it’s important to stay flexible when it comes to spending money

If you overspend in 1 category, then you’ll have to spend less in another category. 

Start budgeting to pay off credit card debt today.

how to pay off credit card debt strategy 2: increase your income

Strategy #2: Increase Your Income

While it’s important to live a lean life, I should note that decreasing your income is limited to your basic living expenses. 

Increasing your income on the other hand is limitless. 

That’s why I’m a very big advocate for getting a side hustle to earn more money.

In fact, the recent COVID-19 pandemic caused 3 in 10 Americans to start a side hustle (31%) and another roughly 1 in 4 Americans (24%) are planning to start a side hustle in 2021.

COVID-19 saw 3 in 10 Americans start a side hustle

Source: Zapier

The side hustle trend just keeps growing.

In fact, 49% of Americans under 35 have a side hustle.

49% of Americans under the age of 35 now report having a side hustle

Source: Fortune

More and more people are realizing that the regular 9 to 5 job is something from the past. 

To survive in today’s tough economic climate, it’s important to build passive income streams to weather the storm.

Below are some side hustle ideas anyone can start today:

Side Hustle Potential Income Resource

Twitter Affiliate Marketer

$0 to $10,000+

Food Delivery


Online Surveys




Dog Sitting / Walking


So what happens when you start making a few $100’s or even $1,000’s?

Use the money that you earn from your side hustle income to eliminate credit card debt fast.

Your extra side hustle income does not mean you can go out and spend it on:

  • Vacations
  • Dining out
  • Luxury purchases

This extra income is meant to pay off your credit card debt as fast as possible.

Once your credit card debt is gone, then you can think about investing extra cash from your side hustle or spending it on things in the “wants” and the “wishes” category, that we discussed in the budget section.

how to pay off credit card debt strategy 3: determine your pay off method

Strategy #3: Determine Your Pay off Method

In the finance industry, there are 2 main strategies for paying off credit card debt 
that is recommended by professionals:

  • Snowball Method
  • Avalanche Method

Below is a quick overview of the Avalanche Method vs Snowball Method:

Avalanche Snowball

Saves the Most $$



You See Faster Results



Pay Highest Interest Rate off First



Pay Smallest Loan off First



Basically, if you want the biggest bang for your buck, you’ll want to pursue the avalanche method because you’ll save the most money.

the millennial money woman blog post "avalanche method example"

On the other hand, if you’re someone who is very impatient and has to see results in order to be motivated, then you may want to commit to the snowball method, instead.

the millennial money woman blog post "snowball method example"

I would also like to add another method that I’ve read about in the past, which is known as the:

  • Blizzard Method

As I’m sure you’ve already guessed, the Blizzard Method combines both the Snowball and the Avalanche Methods into 1 crazy blizzard 😎

The blizzard method is when you:

  • Pay off the smallest credit card balance first
  • Then pay off the highest interest rate balance 

You’ll get the emotional boost you need to stay motivated by seeing fast results (paying off the smallest balance first), while you also save more money like with the Avalanche Method (when you pay off the highest interest rate).

The most important part is that you implement a credit card debt payoff strategy today.

how to pay off credit card debt strategy 4: debt consolidation

Strategy #4: Debt Consolidation

Here’s when debt consolidation may be a good credit card debt strategy for you:

  • You’re paying a very high-interest rate
  • You struggle to make payments on time
  • You struggle paying many different creditors

Debt consolidation could be a good step for you – if you are 100% sure that you won’t rack up more debt while you are pursuing this debt pay-off strategy.

To consolidate your debt, you would hire a company to pay off your many debts for you (in the form of a personal loan). In return, you would owe money only to that 1 company.

Debt consolidation could help you:

  • Pay off your debt faster
  • Improve your loan term
  • Organize your payments
  • Lower your interest rates

If you’re considering debt consolidation, then check out the credit card payoff app, Tally 👇

Tally makes it simple to stay on top of your credit cards.

You scan your cards. If you qualify, tally gives you a line of credit at a low APR and manages all your payments.

No late fees. No gimmicks. Just a faster way to pay down your balances.

Know yourself and know which debt pay-off strategy is best for your situation.

how to pay off credit card debt strategy 5: negotiate with creditors

Strategy #5: Negotiate with Creditors

One lesser-known trick to pay off credit card debt is to pick up the phone and work with your creditors.

Believe it or not, your creditors want you to pay back the money you owe.

And, odds are that you’ll be working with a large credit card company that can afford to bypass a few $100 or a few $1,000 in exchange for a payment plan deal with you. 

Here’s when you have a good chance of negotiating with your creditors:

  • You’re a long-time customer
  • You have a good payment history
  • You have difficulties because of COVID-19

Your creditors may negotiate favorable options such as:

  • Reduction in interest rates
  • Offer of a hardship program
  • Reduction in minimum payments
  • Offer a payment plan with favorable terms
  • Financial relief if you’re impacted by COVID-19

Although no 1 credit card company will be the same when it comes to COVID-19 relief options, there’s a high chance your credit card issuer will offer some form of relief.

Some ways credit card companies would offer COVID-19 relief include:

  • Skip payments
  • Delay payments
  • Eliminate late fees
  • Lower interest rates
  • Extend timeframe for payment

Remember, the worst outcome is that your creditors say no.

how to pay off credit card debt strategy 6: 0% interest balance transfer

Strategy #6: 0% Interest Balance Transfer

Arguably one of the best-kept secrets (not anymore!), the 0% interest balance transfer can help you pay off credit card debt fast and without interest. 

The hard work starts when your credit card balance is transferred to the new credit card with a 0% teaser interest rate.

That’s when you have to:

  • Stop making additional credit card purchases
  • Start aggressively paying off your credit card debt

Keep in mind that a 0% balance transfer will require you to have a good to an excellent credit score, and there may be a balance transfer fee.

Just make sure you read the fine print (as in the credit card comparison chart, above, before you apply.

how to pay off credit card debt strategy 7: debt counseling

Strategy #7: Debt Counseling

You can always take steps to pay off credit card debt, as I’ve outlined in this step-by-step guide.

However, at some point, you also need to ask yourself why you had so much credit card debt in the first place.

Was it because of an expensive emergency like:

  • Vet bills
  • Medical bills
  • Home repairs
  • Car maintenance

Or was your credit card debt the result of more frivolous spending:

  • Vacations
  • Tech gadgets
  • Going out to eat
  • Clothes shopping

Be honest with yourself.

If you find yourself spending to keep a certain lifestyle – beyond basic living needs – then you may want to talk to a debt counselor.

Although debt counselors often do cost money, there are other, free options. 

Some nonprofit counseling agencies include:

If things become more serious (aka you’re considering bankruptcy), you may want to consider hiring a lawyer to help walk you through the legalese. 

Getting into debt is never fun and it can also drain your credit score.

FAQs on How to Pay off Credit Card Debt

If you carry a lot of credit card debt, then you’ll get the best bang for your buck if you pay off the balance with the highest interest rate first, while still making minimum payments toward the other credit cards. 

Once the credit card with the highest interest rate is paid off completely, it’s time to transition your payments from the highest interest rate credit card to the second-highest interest rate card.

Continue this process until all credit card balances are completely paid.

The good news is that you almost always have options to get out of credit card debt fast. 

Below are a few ideas:

  • Budget
  • Get a side hustle
  • Consolidate your debt
  • Lower your living expenses
  • Ask your friends and family for help 
  • Negotiate with your credit card company
  • Implement a balance transfer to a 0% APY teaser rate

Paying off credit card debt is critical to your future financial wellbeing. 

But you also have to remember that there was an initial reason why you had so much credit card debt in the first place – and it’s important to get to the bottom of that issue first. 

If you believe that you may have a spending problem, it might be time to see a counselor (or financial advisor) to help.

If you carried credit card debt due to one-time expenses (such as medical issues, college costs, etc.), then there is a much more favorable chance that you won’t fall into credit card debt in the future.

No, you don’t run the risk of losing your home – at least not initially. 

There are 2 types of debt: Secured debt and unsecured debt. 

Examples of secured debt include:

  • Auto loans
  • Mortgage loans

Secured debt is debt where there is collateral (in this case, your home or your car). If you’re not able to make payments toward your mortgage or your car, then you would run the risk of losing your home or your car. 

Examples of unsecured debt include:

  • Credit cards
  • Medical bills
  • Student loans

Unsecured debt helps you acquire or purchase something, but there is no collateral (like a house or a car) that could be taken from you, at least not initially.

If you do fall behind in payments, your creditor (like a credit card company) may take legal action and sue you, at which point a judge may decide how you will have to repay your creditor. 

Don’t wait to have a judge rule on how you should repay your creditors. 

Just pay back the money as fast as possible and move on.

If you’re drowning in debt, you’ll want to consider taking immediate action, including some of the steps outlined below:

Some things to do when you are drowning in debt:

  • Start budgeting
  • Don’t take on more debt
  • Cut up your credit cards
  • Talk to family and friends 
  • Seek help through counselling
  • Pay off the highest interest debts first
  • Live a lean life by cutting out unnecessary costs
  • Increase your income through a side hustle

You probably won’t see immediate results, so you’ll have to stay patient and consistent with your efforts.

Don’t forget to celebrate the small wins, too. 

Yes, you shouldn’t spend more money, but it’s also important to take some time to celebrate and enjoy the fact that you’re moving in the right direction. 

Closing Thoughts on How to Pay off Credit Card Debt

Especially if COVID-19 has left you with high amounts of credit card debt – just know that you’re not alone. 

In fact, close to 1 out of 4 credit card holders (23%) increased their credit card balance because of COVID-19.

23% of credit card holders increased their balance because of COVID-19

Source: CNBC

Remember to review these strategies for paying off credit card debt as well as consider speaking to a professional counselor to help you move ahead. 

I find that often your financial life is intertwined with your personal life. 

That’s why it is important to take control over your financial life now so that you can live your life in financial freedom

Results will come, but they don’t come overnight. 

What was your favorite credit card payoff strategy? Let me know in the comments below.

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