How to Eliminate Your Credit Card Debt for Good

There was a guy I used to work with named Louis. Louis liked playing the role of the big-shot in our group of work friends.

He would always buy the latest iPhone, eat out at fancy restaurants every weekend, and talk about exotic destinations he was planning on vacationing with his family.

Then one day at lunch, Louis finally broke down and confessed that he was in way over his head in credit card debt. Between a handful of cards, he had somehow managed to rack up an outstanding balance totaling almost $50,000!

What’s worse is that these were high-interest credit cards. And since Louis was only able to afford to make the minimum monthly payment for each one, it was going to be years if not decades before his debt would ever be erased.

Sadly, Louis’s situation wasn’t unique. According to Experian, 75% of credit card holders carry some form of debt. Among them, people in Generation X (ages 40-55) have the most with an average balance of $7,155 while Millennials (ages 24-39) come in second with $4,322.

If you’re in this type of situation, the thing you need to know is that it’s not hopeless. There are plenty of ways to fight back against mounting credit card debt and bring that balance back down to zero. Here’s how:

Be Strategic with Your Payoff Method

One of the best things you can do when it comes to paying off your credit cards is to be systematic about how you go about it. Two strategies I suggested to Louis that have worked very well for thousands of people are:

1. The debt snowball method
2. The debt avalanche method

Here’s how each one works.

Let’s say you’ve got three outstanding credit card balances:

• Card A with a 15% APR and $5,000 balance
• Card B with a 20% APR and $10,000 balance
• Card C with a 30% APR and $15,000 balance

Using the debt snowball method, you would:

• Start by putting your credit card debts in order of smallest to highest balance. In our case: A, B, then C.
• Focus on paying off credit card A first. Continue making the minimum payments on cards B and C.
• Once A is paid off, turn your attention to credit card B. Take all the money you were putting towards credit card A every month and roll it into your payment towards B. Continue making the minimum payment on card C.
• Once B is paid off, turn your attention to credit card C. Roll all the money you were putting towards A and B into your payment towards C. Continue until your debt is completely gone.

Alternatively, you could also choose to use the debt avalanche method as follows:

• Start by putting your credit card debts in order of highest to lowest interest rate (APR). In our case: C, B, then A.
• Focus on paying off credit card C first. Continue making the minimum payments on cards A and B.
• Once C is paid off, turn your attention to credit card B. Take all the money you were putting towards credit card C every month and roll it into your payment towards B. Continue making the minimum payment on card A.
• Once B is paid off, turn your attention to credit card A. Roll all the money you were putting towards C and B into your payment towards A. Continue until your debt is completely gone.

Personally, I prefer the avalanche method since it gets rid of your cards with the highest interest rates first. But there’s something to be said about the quick, small wins with the snowball method too. 

Either way, the goal is the same: Accelerate your debt payoff as quickly as possible. By paying each card down one at a time and rolling your funds towards the next one, you’ll gain momentum with each new card you eliminate.

Use Side Hustles to Accelerate Your Payments

Want to really stuff your payments as much as possible? Instead of squeezing your budget for more money, why not try a different approach and take on some side hustles instead?

I’ve been doing side hustles for years earning anywhere from $100 to over $1,000 per month. There are so many different odd jobs you can do:

• Become a writer or editor
• Manage social media
• Test websites
• Transcribe videos

… And so many others. Click here for more suggestions.

Most of these jobs can be done right from your laptop and during your free time. Plus, once your debt is paid off, nothing is stopping you from continuing to do them and enjoying all that extra cash!

Make a Balance Transfer

If your credit cards have high-interest rates, then it might be time to start shopping around. I always see credit card offers where they have 0% APR introductory rates that are perfect for making a balance transfer. 

A balance transfer is where you move the money you owe from your high-interest credit card to the one with a low or 0% APR. The advantage is that you’ll temporarily halt the interest accumulation and can focus on paying down the balance.

In order to qualify, you’ll likely need to have a good or excellent credit score. You’ll also want to make sure that once the low or 0% APR period expires that you’re not going to get hit with an even higher interest rate and be in a worse-off situation.

Consider a Debt Consolidation Loan 

Another great way to pay off credit card debt is with a debt consolidation loan. A debt consolidation loan is where you take out a low-interest loan that you can use to pay off your high-interest loans or credit card balances. 

Similar to a balance transfer, you’re basically trading one loan for another with the advantage of reducing the interest rate. This will greatly reduce the interest accumulation and make it easier for you to pay down your balance. 

Again, you’ll need good or excellent credit to qualify for this type of loan.

Commit to a Debt Management Plan

Just like my coworker Louis felt the need to finally tell someone about his debt problem, you don’t have to deal with it alone. If you’ve run out of options and don’t know where else to turn next, then a debt management program might be what you need.

A debt management plan is a type of repayment plan managed by a credit counseling agency (typically nonprofit). You’ll meet with a counselor who will review your financial situation, and together you’ll determine how much you can afford to pay each month.

The agency will then negotiate with your creditors on your behalf to potentially lower your interest rate and waive fees. 

On top of lowering your monthly payments, a debt management plan gives you a clear path to becoming debt-free. Plus, you get the assistance of real financial professionals who are there to help you along the way.

The Bottom Line

Just because you’ve accumulated credit card debt, you don’t have to keep it forever. 

You can use DIY strategies like the debt snowball or debt avalanche methods in conjunction with side hustles to accelerate your payments. Or if you’d rather tackle the interest rate, then you can rely on a balance transfer, debt consolidation loan, or debt management plan to help.

No matter what your situation is, just know that you’re not without options. Debt stops controlling you once you learn to control it. So take the lead and start using one of these debt elimination strategies today.

Keep Reading:

• How to Keep Yourself Out of Debt
• Why You Should Use Your Credit Cards for Everything
• How To Understand and Improve Your Credit Score