Home > Credit Cards > 5 Ways You Can Erase Your Credit Card Debt

Comments 0 Comments
Advertiser Disclosure


There’s no one-size-fits-all approach to handling credit card debt. The cheapest way for you to get rid of it might be more expensive for your neighbor, and vice versa.

Here are five ways you can erase your credit card debt. The list starts with the less expensive method. Discover which option is the best and most cost-effective for you.

1. Attack the debt with all your resources

This old-fashioned method won’t cost you money, but it will take time and energy.

The get-aggressive approach will be useful if you become organized and have some savings or income to direct toward your debt. You can start with these steps:

  • Stop using your credit card (or cards) and rely on cash for essential expenses.
  • Make a list of the amount of debt, interest rate, and minimum payment on each card.
  • Use either the debt avalanche method or debt snowball method to target one balance while making minimum payments on all other cards. With the debt avalanche method, you can use your extra money to pay off the balance with the highest interest rate first. Or, you can attack the debt with the smallest amount first by using the snowball method.
  • Create or revise your budget to include your debt payoff method while eliminating unnecessary expenses.

Once your budget is in place, you’ll have a better idea of whether you have the income and savings to catch up to your debt. Earning a raise at work, starting a side hustle, or receiving a big tax refund could help. You could even return or sell the stuff bought with your old credit card.

If your interest rate is too high to manage and you don’t have the means of keeping up with payments — let alone making extra ones — you might consider other options listed below.

2. Use a balance-transfer card

If you have good to great credit, you could transfer the balance from your current card to a new one with a lower interest rate. Some cards offer limited-time 0% annual percentage rates (APRs) and don’t charge fees on balance transfers during an introductory period.

This method might seem counterintuitive because it continues your reliance on credit cards. However, the process is not wise, or even possible, for everyone. You’ll need a strong credit score, for example, to be eligible for that kind of no-fee, low-rate card.

Also, you’ll want to make sure you have the savings or expected income to pay off the balance on your new balance-transfer card before the 0% introductory APR period expires. Otherwise, you’ll be back to square one.

Before you open a new card, use a balance transfer calculator to ensure the math makes sense for your situation. Some calculators also can help you compare loan offers.

3. Apply for a credit card consolidation loan

Credit card debt is especially difficult to repay because the interest rates are high, costing borrowers a lot. The average rate is 16.84%, according to Bankrate.

One relatively cheap way to tackle your debt repayment is to replace it with a credit card consolidation loan, also known as a debt consolidation loan or a personal loan. You pay off your credit card balance with a new loan for the same amount but at a lower interest rate. The rates on the top personal loan companies start below 10.00% and the fees are light.

Enter information about your current debt and potential loan into a credit card consolidation calculator to check the amount you could save with this method.

Other potential benefits of consolidation include:

  • Making one monthly payment instead of different payments to card issuers
  • Contending with a loan’s fixed interest rate instead of a credit card’s variable rate
  • Having a payoff date set by a loan term instead of the never-ending cycle of credit card debt

Personal loans also are available for borrowers with bad credit. However, you’ll likely need to find a creditworthy cosigner for the loan or put up collateral that would be seized if your repayment goes south.

4. Enroll in a debt management plan

You might have tried to talk to creditors about lowering your interest rate, waiving fees, or settling your debt.

If the efforts were unsuccessful, you could enroll in a debt management plan or program (DMP) that comes with the services of a credit counselor.

A credit counselor can help you to budget, create a plan to pay off your debt, and speak to your creditors on your behalf.

Using a DMP, the counselor also would allow you to consolidate your debt into one monthly payment. A small, state-capped monthly fee would be charged for this service. The American Consumer Credit Counseling company, for example, charges monthly fees of $5 to $35.

You don’t need good credit to enroll in a DMP as you would for a balance-transfer card or a personal loan. As with a personal loan, however, using a DMP could take you four to five years to clear your debt.

Be sure to find a company and a counselor via an organization such as the Financial Counseling Association of America, which represents nonprofit counseling companies. Be wary of any debt relief company that promises to wipe away your debt immediately. It could be trying to scam you.

You could also opt for a credit repair company such as Lexington Law if you’re interested in additional services at higher costs. Lexington Law works to help consumers repair their credit.

5. Declare bankruptcy

Bankruptcy should be considered a last resort, especially because it’s the most expensive way to get rid of your credit card debt.

You might see it as an opportunity for a clean slate, but a bankruptcy also affects your future. In some cases, bankruptcy can stay on your credit reports for up to a decade and can harm your ability to find a job or buy a home, according to the Federal Trade Commission.

And even in a successful bankruptcy case, you might not be able to be free of all your credit card debt. Then there’s the cost — hundreds of dollars in court fees alone, and even more for an attorney.

It’s best to discuss your options with a counselor or another financial professional before considering such an expensive method of repaying credit card debt. However, if you opt for a Chapter 7, 11, or 13 bankruptcy, a DMP credit counselor could help with your mandatory pre-filing bankruptcy counseling session.

6. Find the best debt solution for your situation

If you’re trying to figure out the cheapest way to be rid of credit card debt, you might be addressing your problem in the wrong way. Instead, consider all possible solutions and the benefits of each before picking one that’s best for you.

If you have a good income or solid savings, for example, chances are that you can handle your debt on your own. If not, you might pursue professional help with a credit counselor.

Remember: The best choice for another person won’t necessarily be the right one for you. Take a hard look at your own finances before choosing a solution.

If you’re concerned about your credit, you can check your three credit reports for free once a year. To track your credit more regularly, Credit.com’s free Credit Report Card is an easy-to-understand breakdown of your credit report information that uses letter grades—plus you get two free credit scores updated every 14 days.

You can also carry on the conversation on our social media platforms. Like and follow us on Facebook and leave us a tweet on Twitter.

Image credit: Geber86

Comments on articles and responses to those comments are not provided or commissioned by a bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by a bank advertiser. It is not a bank advertiser's responsibility to ensure all posts and/or questions are answered.

Please note that our comments are moderated, so it may take a little time before you see them on the page. Thanks for your patience.

Credit.com receives compensation for the financial products and services advertised on this site if our users apply for and sign up for any of them.

Hello, Reader!

Thanks for checking out Credit.com. We hope you find the site and the journalism we produce useful. We wanted to take some time to tell you a bit about ourselves.

Our People

The Credit.com editorial team is staffed by a team of editors and reporters, each with many years of financial reporting experience. We’ve worked for places like the New York Times, American Banker, Frontline, TheStreet.com, Business Insider, ABC News, NBC News, CNBC and many others. We also employ a few freelancers and more than 50 contributors (these are typically subject matter experts from the worlds of finance, academia, politics, business and elsewhere).

Our Reporting

We take great pains to ensure that the articles, video and graphics you see on Credit.com are thoroughly reported and fact-checked. Each story is read by two separate editors, and we adhere to the highest editorial standards. We’re not perfect, however, and if you see something that you think is wrong, please email us at editorial team [at] credit [dot] com,

The Credit.com editorial team is committed to providing our readers and viewers with sound, well-reported and understandable information designed to inform and empower. We won’t tell you what to do. We will, however, do our best to explain the consequences of various actions, thereby arming you with the information you need to make decisions that are in your best interests. We also write about things relating to money and finance we think are interesting and want to share.

In addition to appearing on Credit.com, our articles are syndicated to dozens of other news sites. We have more than 100 partners, including MSN, ABC News, CBS News, Yahoo, Marketwatch, Scripps, Money Magazine and many others. This network operates similarly to the Associated Press or Reuters, except we focus almost exclusively on issues relating to personal finance. These are not advertorial or paid placements, rather we provide these articles to our partners in most cases for free. These relationships create more awareness of Credit.com in general and they result in more traffic to us as well.

Our Business Model

Credit.com’s journalism is largely supported by an e-commerce business model. Rather than rely on revenue from display ad impressions, Credit.com maintains a financial marketplace separate from its editorial pages. When someone navigates to those pages, and applies for a credit card, for example, Credit.com will get paid what is essentially a finder’s fee if that person ends up getting the card. That doesn’t mean, however, that our editorial decisions are informed by the products available in our marketplace. The editorial team chooses what to write about and how to write about it independently of the decisions and priorities of the business side of the company. In fact, we maintain a strict and important firewall between the editorial and business departments. Our mission as journalists is to serve the reader, not the advertiser. In that sense, we are no different from any other news organization that is supported by ad revenue.

Visitors to Credit.com are also able to register for a free Credit.com account, which gives them access to a tool called The Credit Report Card. This tool provides users with two free credit scores and a breakdown of the information in their Experian credit report, updated twice monthly. Again, this tool is entirely free, and we mention that frequently in our articles, because we think that it’s a good thing for users to have access to data like this. Separate from its educational value, there is also a business angle to the Credit Report Card. Registered users can be matched with products and services for which they are most likely to qualify. In other words, if you register and you find that your credit is less than stellar, Credit.com won’t recommend a high-end platinum credit card that requires an excellent credit score You’d likely get rejected, and that’s no good for you or Credit.com. You’d be no closer to getting a product you need, there’d be a wasted inquiry on your credit report, and Credit.com wouldn’t get paid. These are essentially what are commonly referred to as "targeted ads" in the world of the Internet. Despite all of this, however, even if you never apply for any product, the Credit Report Card will remain free, and none of this will impact how the editorial team reports on credit and credit scores.

Your Stories

Lastly, much of what we do is informed by our own experiences as well as the experiences of our readers. We want to tell your stories if you’re interested in sharing them. Please email us at story ideas [at] credit [dot] com with ideas or visit us on Facebook or Twitter.

Thanks for stopping by.

- The Credit.com Editorial Team