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How to Financially Plan to Pay Off Credit Card Debt

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Credit Cards can be a blessing or a curse, it depends on how you use them. When used well, they can help you keep life ticking over smoothly and on time. Used poorly, and the debt can rack up.

US-wide, credit card balances carried from month to month continue to inch up, reaching $420.22 billion in late 2018, according to NerdWallet’s annual analysis of U.S. household debt. That’s an increase of about 5% over last year. The average U.S. household with credit card debt has an estimated $6,929 in revolving balances or balances carried from one month to the next, the analysis found.

What this means is, if you owe money on your credit cards, you’re certainly not alone, but that doesn’t mean you should be ignoring the debt.

How To Pay Off Credit Card Debt

Paying off your credit card debt can be overwhelming. We’ll show you how to pay off credit card debt and give you the right tools to stay out of debt. Here’s how to go about paying it off:

1. Avalanche or Snowball?

It’s important you set goals around paying off your debt and stick to them. You’ll want to prioritize your debts and break them down into smaller, more manageable chunks to keep you sane.

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The two most popular tactics to do this are the ‘debt avalanche’ and the ‘debt snowball’, and picking one of these (or something in between) is the best way to go.

The avalanche involves paying off your highest interest debts first and continuing down the chain until finishing with the smallest. This method will save you the most money as you are eliminating the highest interest first and avoiding a higher accumulated debt over time.

The snowball focuses on the other end and looks to pay the smallest debts first. The thinking here is that fully paying off the smallest balance will offer a psychological boost that will give you the motivation to continue paying off the rest of your debt.

Finally, the hybrid ‘debt blizzard’ method pays off the single smallest debt first to offer that mental boost before moving to ‘avalanche’ off the highest interest debts straight after.

Once you’ve picked your preferred icy metaphor you have a structured process to stick to and get working on your debt.

2. Redistribute the Debt

There are two ways to shift your credit card debt that could help you.

The first is to take on a debt consolidation loan to pay off high-interest debt. Such a loan would pay off all your current debts and consolidate them into one single debt which you would then make regular repayments towards.

Sounds pretty good, but it’s not a decision to be taken lightly. You need to be sure you can keep up with repayments as a secured loan uses your house as an asset against the debt.

Alternatively, you can roll the balance onto a new, lower-interest credit card to reduce the carrying costs of the debt. Transferring to a card with a lower APR (look for 0%) will release the pressure on you for the time being.

3. Curb Your Spending

You don’t need to close your credit accounts, but cutting or hiding your card will help you avoid the temptation of overspending. It’s worth enduring a few plainer months if it means you can rid yourself of debt, so have a think about making some adjustments around your lifestyle that will make a financial difference on the month.

It could be changing your daily commute to work or taking in a homemade lunch. It could just mean staying in and watching TV and missing a few nights out.

Once you’ve analyzed your lifestyle, sit down and create a monthly plan that incorporates your changes then see if you have some extra cash at the end of the month to help further pay off your debts.

4. Cut the Cord

Finally, whilst you’re trying to pay off your old credit debt it’s probably best to not rack up anymore, so make a conscious effort to stop using your credit cards during this period.

Of course, there may be an emergency payment that needs to be made, but your credit card should literally be ‘emergencies only’ whilst you figure out a solution to your debt.

It’s a difficult road to negotiate, but a structured and disciplined approach will see you on the road to being debt-free and improve your credit rating.


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Once you’ve recovered, you can reintroduce credit cards alongside your other funding options to carefully manage your personal finances from thereon out.

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Adriana Flores
Adriana Flores
Adriana is a contributor at My Millennial Guide and focuses on millennial money management. She has a love for the Chicago Cubs and spending time with family and friends.

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