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From the Experts at Credit.com

Tips for Paying Off Credit Card Debt

by Lucy Lazarony

Paying Off Credit Card Debt

Want to take charge of your financial life? Pay off your credit card debt.

High balances and high finance charges can put a real drain on your wallet and limit your financial options. And if you let those balances linger long enough, they could keep you from achieving other important goals and dreams, such as buying a home.

Plus high balances on your credit cards can be bad for your credit scores. Low credit scores usually mean you will pay high interest rates, and with high interest rates, it’s harder to pay off debt. It’s truly a vicious circle. You can find out exactly how your debt is impacting your credit by checking your credit score for free at Credit.com. You’ll get a truly free score – two in fact – plus you will learn exactly how your debt impacts your credit.

Whatever your financial goals and dreams, paying off high-interest credit card debt is the first important step in the right direction. These pay-down tips and strategies will show you how.

Get organized. Step 1 is getting organized. Gather up all your credit card information. Make note of the balance, interest rate, due date, and minimum payment for each card. How bad is it?

Do you have lots of balances spread out over lots of different cards? Do you have one big balance and several small ones? Have you consolidated your debt to one card but can’t seem to make any headway on your balance? Have you been playing the balance transfer game for months and months?

Next, add up the minimum payments on each of your credit cards. How much money must you pay each month just to stay current on your credit card bills? Can you afford to pay more than the minimum payment on one or more of your cards? If so, get ready to do it.
Debt can pile up for all kinds of reasons. Paying it down is pretty straightforward. Pick a pay down strategy and stick with it until your balances are paid off in full.

Three Different Credit Card Pay-Down Strategies

Pay Off the Balance with the Highest APR First

From a dollar and cents point of view, this strategy makes the most sense. With this strategy, you increase your payment on the credit card with the highest annual percentage rate while continuing to make the minimum payment on the rest of your credit cards. Once you pay off the balance on the card with the highest interest rate, you move on to the card with the second highest interest rate, and so on.

Doubling or tripling your minimum payment on the card with the highest interest rate is a good way to start. Whatever payment boost you can afford, do it and stick with it. If you start by paying $150 on a credit card, keep on paying at least $150 each and every month until the card is paid off.

Be sure to stick with your boosted payment amount even as your balance and minimum payments slip lower and lower. Remember: the aim is to get your balance to zero. Easing up on your payments as your balance creeps lower will slow your progress.

Pay Off the Card with the Lowest Balance First

This strategy is a great way to build up a little momentum. With this strategy, you increase your payment on the credit card with the lowest balance, while continuing to make the minimum payment on the rest of your credit cards. Once you pay off the card with the lowest balance, you move on to the card with the next lowest balance, and so on.

It’s quicker and easier to pay a $500 balance down to zero than a $2,500 balance. And it feels good to pay a credit card bill in full, no matter what size balance you begin with. Plus, every low balance card that you pay in full is one less minimum payment that you have to pay each month. By knocking out one or two smaller balance cards, you’ll have more money to focus on larger balances.

Consolidate Your Debt to a Single Card or Loan

Like things simple? This pay-down strategy might be for you. By consolidating your credit card debt to a single card or debt consolidation loan, you have a single payment to make each month rather than four or five. One payment to pay each month – that’s it. You can even automate payments so you never have to worry about paying late. Just be sure to choose a payment amount much more than the minimum each and every month so you can make some real progress on paying off your debt.

This payment strategy makes things easy, but it also makes it easy to let things slide. So pick a payment amount, double or triple your minimum payment (or whatever you can afford), and be sure to stick with it.

Stop charging. Whatever pay-down strategy you choose, it’s essential that you curb your credit card spending. It’s awfully hard to pay down credit card debt when you keep ringing up new balances each month. Put your credit cards on ice while you focus on paying down card debt. Pay with cash, check, or debit card instead. If you must use your credit card, only charge items you can pay off in a month or two.


  • http://www.credit.com/ Credit.com Credit Experts

    What do you mean by paying the apr (annual percentage rate)? Do you mean paying the minimum payment? If your balance is below 30% of your credit limit (less than 10% is even better), paying the minimum should not affect your score much. You can read more about it here: Making Sense of Your Credit Score

  • http://www.credit.com/ Credit.com Credit Experts

    It probably is not. In addition to the 10% penalty, you will pay taxes on your withdrawal (the money grows tax-free until you take it out — and then you pay taxes on what you withdraw). So, if you were in the 28% tax bracket, you’d likely spend nearly 40% of what you’ve saved for retirement. (Also, if your financial situation is so desperate that bankruptcy might be an option, be aware that retirement savings are often protected.) Please get some professional advice before deciding how to proceed. but in general withdrawing retirement savings to meet current debts is a very bad idea. These resources may help:
    5 Questions to Ask Before Using Retirement Funds to Pay Bills
    Filing for Bankruptcy: The Difference Between Chapters 7, 11 & 13

  • http://www.Credit.com/ Gerri Detweiler

    You’re right: card issuers will not settle if you are current. So you have to look at all your options and decide which one is best for your overall situation. We wrote about them here: 5 Ways To Get Out of Debt: Which Will Work for You?

  • Marie

    Hi, Is it true that if a credit card company lowers your interest rate then reduction only applies to future purchases? Thanks, Marie

    • http://www.credit.com/ Credit.com Credit Experts

      It might be. It’s important to be sure you understand what you are negotiating. A reduction on your current balance? Future purchases? Or both?

  • http://www.credit.com/ Credit.com Credit Experts

    It will depend on how the rest of your credit picture looks. Among other things, the amount of available credit you are using (anything higher than 30% will hurt your score, even if payments are on time), the mix of credit, the amount of time your account has been open and other factors are considered in calculating your score. But the biggest thing you can do is make payments as agreed. Here are more resources that may help you:
    Making Sense of Your Credit Score
    Credit Score Updates: How Long Will It Take?

  • http://consumerrecoverynetwork.com/ask-a-question/ Michael Bovee

    What is the situation with the bills? Are some of them already many months behind? Is he oversimplifying paying off a car loan you just got, and losing the benefit of seasoned payment history (which is not really “hurting” the credit score)?

    Need more details.

  • shauna

    I have been knocking out my credit cards by hitting the highest apr first and snow balling it. I am almost at the point where I am done with credit card debt! Now I am looking at a truck note with 3 years left on it and my student loans. I have about 55K in student loans and 12K on my truck. My student loans have a higher apr than my truck, but I am tempted to pay off the truck first because it will “free up” almost $350 a month. Which would be better?

    • http://www.credit.com/ Credit.com Credit Experts

      Shauna —
      If you wanted to continue to use the snowball method, it seems you would pay the truck off next, because the balance is smaller. (And, if you were able to put the additional truck payment toward your student loan debt, you could make some rapid progress there.) Also, the truck loan isn’t as likely as the student loan to be gone forever once it’s paid off (meaning you are more likely to get a replacement vehicle and new loan than to get another student loan).

      But you definitely should go the way that makes the most sense and feels the most motivating to YOU.

  • http://www.credit.com/ Credit.com Credit Experts

    Scenario 2 is probably better, depending on your credit limit. You’ll want to keep your balance below 30% (and below 10% is even better). Either strategy accomplishes the important goal of avoiding paying interest. It is impossible to guess which day your balance will be recorded for credit-scoring purposes. Some people choose a third option and pay most purchases off immediately so that the balance stays very low even if they would have otherwise used a higher percentage of available credit.

  • http://www.credit.com/ Credit.com Credit Experts

    You can also see your free credit score at Credit.com. That also offers a personalized analysis of why your score is what it is. It is updated every 30 days, so you can monitor your (hopefully increasing) score. Good luck to you.

  • joan

    We have a credit card at 18% interest that we transferred $5000 to a 0% interest for 18 mo card. We are budgeting to pay off the amount on the 0% in 12 months. We are thinking we will pay just above the minimum on the 18% card. Is that the best plan?

    • http://www.Credit.com/ Gerri Detweiler

      I am sorry – I don’t follow. You transferred the 18% balance to a 0% card right? So where does the minimum payment on the 18% card come in? I thought that balance was paid off – no?

  • Andrew

    I transferred $5500 on a 0% interest credit card that lasts for the next 12 months at 0% with a limit of $6500. I have a another credit card that has a $10,000 limit with $1000 balance at 15% interest. I’m paying more than my monthly minimum on both cards. I’m getting a decent size cash gift for Christmas and would like to use it on paying off my debt. What should I do with lets say a $2000 gift?

    • http://www.Credit.com/ Gerri Detweiler

      It really depends on what your goal is here. Paying off the card with the small balance of 15% interest is going to save you money. But paying down the card that is nearly maxed out will probably be more beneficial for your credit score. One option might be to pay off the card with the $1000 balance and then put the other thousand dollars toward the other card. You may find that once the card with the $10,000 limit is paid off, you may get a balance transfer offer you can use if the other one isn’t paid off when the 0% deal expires. But that’s never guaranteed.

  • RJ

    Hello. I have approx 6k in credit card debt with credit cards and they are basically at 90% full. I have an another 5k in an american express gold card that was charged off last year and I am in a payment program with them but only $100 a month towards it. I have 3k cash that I earned to apply to my cards to bring the balance down below 30%, but I was wondering if I should pay down the charged off credit card to get that paid first instead, not sure what to do. Trying to buy a new car at the end of the year. Thank you.

    • http://www.Credit.com/ Gerri Detweiler

      Before you do anything, it might make sense for you to put that cash toward a car if you need to get one in order to have reliable transportation. You can pay it toward the charged off credit card but it probably won’t boost your credit score in the short term because the charge-off will still be there and it’s negative no matter what. You could also try using it to bring down the other balances, but I’m not sure how much that will change your overall score because of the charge-off. It just depends on everything in your report. My thinking is if you can find a relatively inexpensive car and make a decent down payment, that may be your best bet. On the other hand if those card balances are at a very high interest rate and you can get a car loan at a lower rate you may save money that way.

      Why don’t you see what kind of car loan you can get preapproved for through a credit union? Here is a list of credit unions that offer car loans nationally.

  • http://www.Credit.com/ Gerri Detweiler

    What were the reasons you were declined for the card? Do you know what your credit scores are? I ask because a personal loan may be another good option.

  • Ian

    Should I pay off my debt in one payment or pay as much as I can when I can? I have small debts, 2k-3k on three cards.

    • http://www.credit.com/ Credit.com Credit Experts

      Pay when you can, making sure you are keeping all your cards current. Do not pay so much that you have nothing left for an emergency fund. Here’s another post that may be helpful:
      5 Ways To Get Out of Debt: Which Will Work for You?

  • http://www.Credit.com/ Gerri Detweiler

    Under the Credit Card Act, issuers must apply any amount above the minimum payment to higher interest rate portions of your balance. Are you paying more than the minimum?

  • http://www.Credit.com/ Gerri Detweiler

    Utilization is calculated on each card individually and all of them in the aggregate. So if your goal is to improve your scores, your best bet is to get them all down to 20 – 25% or less of your available credit (there’s no exact #).

    • Lisa

      How long does it usually take for positive things like paying down a balance to affect your credit score?

      • http://www.Credit.com/ Gerri Detweiler

        Lisa – It can happen quickly. A credit score is calculated at the time it is requested based on information available at that time. So if the updated balance has been reported (and most creditors report monthly) that’s what will be used to calculate credit scores.

  • Eric

    Hi,
    My wife and I have a total of 32 credit cards between store, gas, and regular V/MC cards. Total credit is about $46000 and debt as of today is like $24000. I took on a different strategy while paying down credit cards to raise my score to get my mortgage. First, we pay for EVERYTHING with credit cards then pay nearly every dime on my cards come pay day, and try to use the rewards cards as much as we can to get cash back, then I pay off every card I can pay off to a zero balance, and on the others pay at least enough so the balance is no higher than the prior month. We had our usage down to about 20% but while on vacation, we cooked the motor in our RV so had to have that fixed, get a hotel while there instead of a cheap campground, and do a one way rental car to get back home, then fly down and drive the RV back which after all of that put about $9000 further in debt.
    Now I have been trying to pay off or at least the prior month’s balance on as many cards as I can. This leaves me with most cards in one of two groups, either paid off or low and I pay no interest, or a balance around 70-80% of my limit, and paying interest on them.
    Which would be better, paying cards off and paying what I can on others and carrying high usage, or having a balance on every card and having lower usage on the ones over 70%.

    • http://www.Credit.com/ Gerri Detweiler

      If your credit scores are your primary concern then your goal should be to pay all of them down to 20 – 25% or less of the available credit. Less than 10% is ideal, but the interim step should help. If your goal is to get out of debt then I’d suggest you create a written plan for all the debts, targeting the highest interest rate one to pay off first, and then so on down the line.

      Those two goals may not line up perfectly so you may have to choose between one and the other.

      • Eric

        I appreciate the response, but is it worth sacrificing cards that were paid off the prior month and not paying the last month’s balance to be able to pay down higher usage cards? My fear is that if I pay minimums and not last month balances, I will be paying interest on cards that haven’t been charging me interest so more ends up going to interest than balance. I was also told elsewhere that having 6-10 of my accounts with no balance is good for my credit score and not paying those off to put money elsewhere could hurt my score more than dropping an account from say 85% usage to 75%

        • http://www.Credit.com/ Gerri Detweiler

          I am sorry my answer was not very specific but I am having a little trouble following your scenario. It’s hard for me to tell what’s going on with each card.

          I agree with you here: “My fear is that if I pay minimums and not last month balances, I will be paying interest on cards that haven’t been charging me interest so more ends up going to interest than balance” I don’t want to see you pay interest on those cards either.

          As for utilization it is calculated individually and in the aggregate. But if I understand your situation, you want to continue paying the ones you can pay in ful in full and then tackle the ones with balances one at a time starting with the highest rate balance first. If you want, when you get one of those with balances down to 25% you can move on to the next highest rate but ideally you want to get your high rate cards paid off so more money is going toward principal (on the others) than toward interest.

          Make sense?

  • Paulette Cogshell

    Hi Miranda. Before I had file Chapter 7 bankruptcy 10 years ago I once had fair credit after bankruptcy of course my credit score is poor and I’m unable to qualify for any unsecured credit cards including Credit One Bank. I don’t recommend filing bankruptcy have you talk to a credit expert just like the website recommend have you consider a debit consolidation loan?

  • Paulette Cogshell

    My credit card issuer has closed and transferred to collections agency and will be removed off the credit report May 2015? $800.00 debt. Should I pay more than minimum payments before May or not?

    • http://www.Credit.com/ Gerri Detweiler

      That’s really your choice. Paying more before that time probably won’t boost your credit scores, if that’s what you’re asking. It really depends on whether you just want to get this debt paid off or not. This article may help: The 7 Biggest Questions About Debt Collections & Your Credit

  • Carolyn Mossey

    I had very poor credit and lots of cc debt. I filed bankruptcy and did not regret it. It took me out of debt and my credit didnt hurt much bc it was aleady poor. The worst part was waiting for it to come off my credit report but it gave me time to rebuild credit while I was waiting for the bad stuff to come off. I consider it ” lesson learned”.

  • Crystal

    Hello I have several credit cards totaling debit to around 20K, I was just approved for yet another personal loan to of 13K. Should I use this money to pay down my debit and if so should I apply it to the highest interest rate first or the lowest balances? Should I just refused the personal loan? I feel like im drowning lately

    • http://www.credit.com/ Credit.com Credit Experts

      You need a strategy for attacking your debt. Is the interest rate on the personal loan lower than the interest rate on your debt? And do you have a plan to cut expenses? Because if the personal loan serves only to pay off the cards so that you can run them up again, you will have actually lost ground. Here are some ideas for repaying debt (and sometimes what you will need is a way to make additional income . . .): 5 Ways To Get Out of Debt: Which Will Work for You?

  • Aisha

    I am currently just under $18k in high interest debt, spread across 6 accounts. Two of the accounts are at just under $5k with 90% utilization (different airline cards with an annual fee of $96 each), two are around $3500 with 90% utilization (no fee), one is just under $1k with equal utilization (no fee), and one is an account that was closed a few years ago and the balance is under $1k. I had two closed accounts I paid off in full within the last month (about $2200 total). I can maximize $900 a month in paying down high interest debt. Seeing as most of my accounts have a similar balance, utilization, and interest rate, what would be the optimal strategy for overall debt reduction? Since I’ve recently paid off two accounts, I’m feeling pretty good about manageability, but I want to be able to turn that $900/month into retirement savings and investing as quickly as possible (I turn 30 in six months). Part of me wants to pay down my two cards with the lowest balance first so I can keep feeling successful, but not if it would make more financial sense to devote the largest percentage to cards with higher balances. Increasing my score isn’t my largest priority since I do have access to credit and don’t plan to buy a car or home anytime in the next 3 years.

    • http://www.credit.com/ Credit.com Credit Experts

      Aisha —
      The secret to debt repayment is using a plan that you’ll stick with. You may want to consider dividing your payments so that you can bring down your credit utilization. And once you pay off an account, please don’t close it. An old account (still open) can help you in the areas of credit age and credit utilization. If you close the accounts, your overall utilization will go up. You can (and should) keep tabs on your credit scores during this process. Here’s how to monitor your credit score for free. Good luck in putting that debt behind you.

  • Santiago

    Is it better to pay off the debt and close the account or leave it open?

  • http://www.credit.com/ Credit.com Credit Experts

    What are the interest rates? You might consider paying the one with the highest interest rate first.

  • Jordan

    I have a credit card with a $2,000 balance at 26% apr (open for 4 years now). I also have an old credit card (I’ve had it open for 8 years now) with a balance of $1,200 at 7.5% apr. I’ll be receiving a substantial amount of money in the next few weeks and was wondering if it would it be smarter to pay more than half of what’s owed on the card with the higher apr or to pay off the older card with the lower apr off completely. The card with the larger apr is KILLING me in interest fees. I’m obviously trying to get my score back up. It’s ‘Good’ right now, but I don’t want to make the wrong decision and hurt it in the long run.

    • http://www.Credit.com/ Gerri Detweiler

      Pay off the more expensive card. You don’t have to close it unless they are charging an annual fee you don’t want to pay and they won’t waive it. Not sure why you are worried that paying it off will hurt your credit…?

      • Jordan

        Thank you! I was only concerned about it hurting my score because of the amount of time the older card has been open. I guess that is somewhat irrelevant since I’ve always paid on it and not faulted payments. Thought it could be better to pay it off, but I’m going to pay on the higher apr.

  • hmii

    I have two credit cards and they closed the account : will paying Ln these cards open the account again and will this affect my crier positively?

    • http://www.Credit.com/ Gerri Detweiler

      I am not sure I understand your question clearly but paying the balance probably won’t reopen the account though you can always ask. If not, you may need to get a secured credit card to rebuild your credit.

  • Carissa Gage

    So I have 3 Credit cards and two have 1000 dollars on them and the third one has a high Apr and I have 3000 dollars . should I pay the smallest first or start on the card with the high Apr?

    • http://www.Credit.com/ Gerri Detweiler

      You will save the most money by paying off the credit card with the highest interest rate first. Does that help?

  • YOUR FRIENDLY STATE FARM AGENT

    I have one card with $1900 balance on a $5000 Limit. I make $2000/month, is it damaging my credit to consistently have this balance be around $1500 a month? i make bi-weekly payments of at least $150, sometimes more, but i also continue using it

    • http://www.Credit.com/ Gerri Detweiler

      A $1900 balance on a card with a $5000 limit is a 38% debt ratio. That’s on the high side. It probably affects your score. Have you checked your grade for this factor with a free credit score from Credit.com?

  • Andrea F

    Should I borrow from my 401K to pay off high interest credit cards?

  • Kristen Dressel

    I have a credit card that has a limit of $5000. My current balance including pending transactions is $4929.79. I have never been good at paying per statements, I always pay per current balance as I am worried of going over my limit and ruining my credit. What is the best way for me to get this balance down? Christmas always bring the balance up and it’s hard for me to get it down. I read somewhere in one of your replies to “use a debit card for purchases instead of the credit card” so as you pay off the card, the balance isn’t rising from purchases still. Please help :)

    • http://www.Credit.com/ Gerri Detweiler

      Kristen – I am not sure I understand your question. Do you pay in full each month? Or are you constantly finding your balance near the limit and hard to pay down? If the latter you may want to consider talking with a non-profit credit counselor. If you pay in full, then you can make payments throughout the month so that your reported balance is lower.

      • Kristen Dressel

        Hi Gerri – Before Christmas, I was always paying my card down in full each month. Since Christmas, I seem to be behind each month and I am unable to get card down. I am constantly close to the limit.

        • http://www.Credit.com/ Gerri Detweiler

          Kristen – If you are having trouble catching up, I would encourage you to talk with a credit counseling agency. They may be able to help you get back on track so you can pay the debt off. We wrote about that here: Does Credit Counseling Work?

  • Trishy Lopez

    Hi I am getting 43,000.00. I Am in 24,000 in credit card debt. Should I pay it all off?

    • http://www.Credit.com/ Gerri Detweiler

      Is there a reason why you wouldn’t? Do you have emergency savings? Will it be $43,000 before or after taxes?

      It’s a more complicated question than it may seem!

    • http://www.credit.com/ Credit.com Credit Experts

      We can’t make that decision for you. Are there reasons you would not want to use the money that way?


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  • Meet Our Expert

    lucy_lazarony GravatarLucy Lazarony is a freelance personal finance writer. Her articles have been featured on Bankrate, MoneyRates, MSN Money, and The National Endowment for Financial Education. Prior to freelancing, she worked as a staff writer for Bankrate for seven years. She earned a bachelor's degree in journalism from the University of Florida and spent a summer as an international intern at Richmond, The American International University in London. She lives in South Florida.
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