How to Pay Down and Ultimately Eliminate Credit Card Debt

Credit card debt is one of the easiest things for people to accumulate, and one of the hardest to get rid of. It’s therefore one of the biggest problems facing people today. There are some tricks to getting rid of credit card debt entirely though, and we’re here to share them with you.

Credit cards make it fast and convenient to buy the things we need, but they also make it fast and convenient to buy the things we don’t. Responsible spending habits are an absolute must when you have a credit card. Once you’ve accumulated credit card debt, it can take years of painful payments to eliminate.

Think about it. Did that new pair of pants, or a new pair of shoes make you any happier? Chances are extremely likely that the answer is no. Shopping, however, triggers our brain’s dopamine receptors with a reward signal. That’s why it can be literally an addiction for some people. Understanding this is the first step to understanding why it’s so difficult to stop spending money, even when you know it’s self-destructive. 

The other thing that makes credit card debt so difficult to pay off is that the minimum payments are low enough that you’re just covering the interest on the account and a tiny bit of the principal you owe. That means that you’re barely making any progress on your credit card debt by paying the minimum payment. 

Let’s do a simple math problem to illustrate the point:

If you owe $10,000 on a credit card with an 18.99% APR, and a $250 minimum monthly payment…

  • You’d spend 64 months (or over 5 years) paying off the balance
  • You’d spend $5,960 in interest (nearly 60% of the balance you started with)

​If you’re in credit card debt and want to get it under control, pay it off, and stop credit card debt from accumulating again, the following tips are for you.

1. Get Spending Under Control
Spending money can be like an addiction and credit cards fuel the whole cycle. They’re so easy to use, and you are only confronted with the reality of your purchases at the end of the month. The first thing you need to do if you’re in credit card debt therefore is to get your spending under control. Take it seriously and be very careful about what you need and what you don’t need. Most people spend mountains of money on things they don’t need like clothes, drinks, meals, and accessories. 

If you don’t think you can control your spending, one option is to actually leave your credit cards at home, and take only as much cash as you need for the time you’ll be gone. This will force you to cut the fat from your budget. Some people even go so far as to cut up their credit cards to prevent them from using them.

2. Get a Holistic View of your Financial Situation and Create a Budget
How can you get where you’re going without understanding how you’ll get there? This is why it’s important to get a holistic view of your financial situation if you’re really serious about getting out of credit card debt. In essence, this means gathering all your credit card bills, utility bills, other loans you owe money on, and a history of all your spending for the last year or so. Then you can sit down, total up all the income you have. This is your starting point, and you absolutely must spend less than this amount. 

Next, total all your expenses, and categorize them into “Necessary,” “Nice to Have,” and “Unnecessary.” These will help you see where you’re wasting money that could be used to help you pay off your credit card debt. 

  • Necessary expenses: Housing, transportation, food (groceries only, not dining out), utilities, education, and cell phone.
  • Nice to Have expenses: Video streaming services (Netflix et. al.), music streaming services (Spotify, et. al.), gym membership, 
  • Unnecessary expenses: Bars and restaurants, alcohol, cable TV, video games, sporting events, etc. If it doesn’t clearly meet the definitely of necessary, it’s probably an unnecessary expense.

Depending on your level of financial literacy, it may be wise to ask a financially savvy friend or family member, or a financial planning professional to help. The conversation can be embarrassing or awkward, but it will be helpful in two ways. First, the obvious is that you’ll get a clear picture of what steps you can take to curtail your credit card debt. The second is less obvious, but it’s that you’ll have told someone else and will therefore have some accountability to that person. If you have a conversation with a trusted friend, then show up with a new pair of shoes, you’re probably going to get called out on it. That accountability will help you stay true to your mission of getting out of credit card debt.

Using this information, you can now create a budget. In its simplest form, your budget can be the total amount you’re able to spend each month on each category (ex. $500/month for groceries).  Write it down so you can refer to it as needed, and even consider putting it on the refrigerator or somewhere else that you’ll see it regularly. Stick to that amount and you’ll be successful. You can get more complicated (and automated) and use an app like if you’d like. Websites and apps like this can automatically monitor your spending and let you know if you exceed your spending limits.

3. Consolidate Your Credit Card Debt
Now we get into the most critical piece of how you’ll get out of credit card debt. You need to consolidate your credit card balances into one monthly payment that accrues interest at a lower rate. This will accomplish a few things – first, you’ll have one place to look at the balance you owe, which can be useful to staying on track. Second, you’ll drop the extremely high interest rate on your credit card (often approaching 20%) and lower that to somewhere between 0% and 8% typically. Over the time you’ll take to pay off your debt, this interest rate can make a massive difference. 

Option 1: 0% Interest Balance Transfer Offers on Credit Cards
You probably get all sorts of credit card offers, and if not, you can easily find offers online. One of the most common marketing tactics to get you to open a new account is to offer 0% interest for 1-2 years on balance transfers. That means that you can move the balance you owe from one or multiple credit cards to a new credit card and pay 0% interest on that debt. These offers can be extremely useful, but only if you’re rigorous in your self discipline. This technique makes money for the credit card companies because they know that someone who ran up a balance on another credit card is likely to do the same thing on this one. Do NOT fall into that trap. It’s up to you to make the decision to get out of credit card debt, and stick to it. Balance transfers can work, but you must have self control.

Option 2: A Personal Loan From a Bank
​If you can’t get a 0% interest balance transfer credit card, or if you don’t think you have the self control to not repeat past spending mistakes on a new credit card, a personal loan can be a great option. You’ll pay a much lower interest rate, eliminate the balance on your credit cards, and you’ll have an opportunity to improve your credit through on-time payments on this loan. What you’ll do is apply for a personal loan up to the amount of your credit card balances, the use the loan funds to pay the balances. You may have to secure the loan with your vehicle title, or another asset with significant value if your credit score isn’t very high. The risk here is that paying off your credit card balances with a personal loan can make you feel like you can spend money on your credit cards again. That’s not the case – you still owe the money, you’re just saving a lot of money on the interest rate. Again, you must be rigorous in your decision to get out of credit card debt, and stop the habit of spending money on unnecessary things.Here’s the best place to apply for personal loans online:

  • Consolidate credit card debt with a personal loan

4. Be rigorous in your new budget, and avoid falling into old habits.
Once you consolidate your balances and are working to pay off your credit card debt, you’re on the road to freedom. Don’t mess that up by falling into old habits though! It’s critical to maintain an unwavering commitment to being free from credit card debt, and to adopting mature spending behavior. You need to stick to your new budget, and establish emergency savings so you’re not paying interest again on everyday purchases.

The best thing you can do is to set up automatic payments on your credit cards, so any spending you do is paid in full at the end of every month. Then, leave your cards at home if you don’t have the discipline to avoid pulling them out. 

Be sure to tell your friends and family about your new budget too. You can either be straight with them – telling them that you want to be out of credit card debt, or you can simply tell them that you made a new budget and you’re going to stick to it. 

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