How to pay off credit card debt: clouds, credit card, flying man, broken credit card and man.

How to Pay off Credit Card Debt in 2024

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We know how incredibly easy it is to rack up credit card debt.

Nearly 50% of Americans carry a credit card balance, with the average debt totaling $6,501 in 2023.¹ Credit card holders between the ages of 40 and 49 hold even higher debt, averaging around $7,600. Rising inflation rates have made it even harder for Americans to avoid going into credit card debt, with total debt reaching a record high of $17.5 trillion² in the fourth quarter of 2023.

But here’s the tricky thing about credit cards: They only benefit you when you’re building credit and receiving perks — not when you’re paying interest. If you’re paying a lot of interest on your balances, credit card companies are making money off of you.

Your cards are using you, not the other way around.

With average APRs (annual percentage rates) on new credit cards north of 24%³, paying them off is a smart move. You can do it. And it’ll be worth it.

detail of a fist with credit cards between his knuckles
Tina Russell/The Penny Hoarder

5 Key Ways to Pay Off Credit Card Debt

Before you start your journey to becoming debt-free, try to stop using your credit cards altogether — at least until you can use them without putting yourself at financial risk. Though the specifics will vary based on your situation, we only recommend using credit cards if:

  • You don’t have any debt outside of a mortgage or student loans. (Mortgages and student loan debt are almost impossible to avoid nowadays.)
  • You have an emergency fund with three to six months of expenses saved. This is how much money you’d need to survive during that time period, assuming you have no income reaching your bank account.
  • You can pay off your credit card debt in full every month — not just minimum payments.

However you do it, make paying off your credit cards — and learning to use them responsibly — a high priority.

First, determine how much credit card debt you have. You can do this using a tool like Credit Sesame, a free credit monitoring service.

Then, choose your weapons! We’ll go over five different methods, from debt consolidation loans to repayment strategies to settlement, for paying off your credit card debt.

1. The Debt Avalanche Method

Instead of looking at your debt in its entirety, we recommend approaching it bit by bit. By breaking your debt down into manageable chunks, you’ll experience quicker wins and stay motivated.

Two popular ways to break down debt repayments are the debt avalanche and debt snowball methods.

Using the debt avalanche method, you’ll order your credit card debts from the highest interest rate to the lowest. You’ll make the minimum payment on each of your credit card accounts, and any extra income you have will go toward the highest-interest card.

Eventually, that card will be paid off, and you won’t have to worry about that monthly payment anymore. Then, you’ll attack the debt with the next-highest interest rate, and so on, until all your cards are paid off.

2. The Debt Snowball Method

With the debt snowball method, you’ll prioritize your debts from the lowest balance to the highest, regardless of the interest rates on the cards. You’ll make the minimum payment on each of your credit card balances, and any extra income will go to the credit card with the smallest balance.

Starting with the smallest balance allows you to experience wins faster than you would with the avalanche method. This method is ideal for people who are motivated by quick wins, but it has a downside: Those who choose it could end up paying more interest over the long term.

Here’s an example of how each method would work if you’re paying off four credit cards of varying balances and interest rates.

  1. $654 with 0% interest
  2. $5,054 with 15% interest
  3. $2,541 with 23% interest
  4. $945 with 17% interest

If you followed the avalanche method, you’d pay off card No. 3 first, followed by No. 4, No. 2 and No. 1. If you followed the snowball method, you’d pay off card No. 1 first, followed by No. 4, No. 3 and No. 2.

Choosing the right method comes down to deciding whether you’d rather get quick results or save money on interest. We encourage you to check a debt calculator yourself, so you can calculate what each method would cost you.

3. The Balance Transfer

If you have good to excellent credit (typically a FICO score of 670 or above) and can feasibly pay off your debt within a year, a balance transfer credit card is a great option. Balance-transfer credit cards can save you money on interest charges by letting you transfer the balance of a card with a high-interest rate to a card with 0% interest.

Most of these cards offer 0% interest for 12 to 18 months with no annual fee. They generally have a 3% to 5% balance transfer fee, but you can easily find balance transfer cards with no fee. Higher credit scores help borrowers to qualify for a credit card with better terms.

Think a balance transfer card is the right move for your finances? We’ve put together a list of the best balance transfer cards currently available.

4. Take Out a Loan

You might look at getting a loan to consolidate and refinance your debts.

If you get a loan with a lower interest rate and pay off your credit cards, that lower rate could potentially save you thousands of dollars in interest.

This is a realistic way to pay off credit card debt if you currently have little or no money to put toward it.

Let’s look at two options for debt consolidation here: A personal loan or a home equity loan.

Personal Loan

Online marketplaces will allow you to prequalify for a personal loan without doing a hard inquiry of your credit, so if you want to shop around, head there first. Shopping for personal loans online does not affect credit scores.

A personal debt consolidation loan is a good idea if you have decent credit and can manage the repayment plan that accompanies the loan. Credit cards offer revolving credit, meaning you can continue to borrow and just make minimum payments. In contrast, debt consolidation loans will have a predetermined repayment plan with a set schedule of payments.

A debt consolidation loan is similar to a balance transfer credit card, as you are consolidating all of your debt into one place. The personal loan route is more attractive, however, because rates are typically lower for debt consolidation loans.

A good resource for finding personal loans here is AmOne. If your credit score is at least 620, AmOne can help you borrow up to $100,000 (no collateral needed) with fixed rates starting at 6.40% and terms from 6 to 144 months.

Home Equity Loan

If you own a home with equity, you have three ways to borrow money against the value of your home: a home equity loan, home equity line of credit or cash-out refinance.

  • With a home equity loan, the lender gives you your money all at once, and you repay it at a fixed interest rate over a set period of time.
  • With a home equity line of credit, you’re given a limit to borrow. Within that limit, you can take as little or as much as you need whenever you want.
  • With a cash-out refinance, you refinance your first mortgage with a mortgage that’s slightly more money than your current one and pocket the difference.

For homeowners, these options will most likely offer the lowest interest rates. But they’re also the riskiest because your home is the collateral — something you own that your lender can take if you don’t pay off the loan.

5. Debt Settlement

The world of debt collections and creditors can be confusing, intimidating, and sometimes even illegal. There’s a common misconception, for example, that someone can take your house or you can go to jail for not making your credit card payments. But credit card debt is unsecured debt, meaning no one can put you in jail or take your house if you don’t pay it.

If you’re being harassed by creditors or have circumstances that make your debt repayment confusing, don’t give up before finding out your options for assistance.

Debt Management Program

With a debt management program, a credit counseling company will handle your consolidation in hopes of getting you a better interest rate and lower fees. You’ll be assigned a counselor who will set up a repayment and education plan for you. This program is specifically for unsecured debt, like credit cards and medical bills.

A debt management program pays your creditors for you to ensure you stay current on your debt payments. Your credit score may even improve during the program. But if you miss a monthly payment, you can be dropped and lose all the benefits you gained.

Debt management plans usually don’t reduce your debt, but they may reduce your interest rates by as much as half or extend your payment timeline to make paying your debt more manageable.

Credit Card Debt Settlement

If you’re in more than just a temporary season of financial instability, and you can’t see yourself affording the amount of credit card debt you owe, debt settlement is an option, though we regard it as a last resort.

Debt settlement reduces the amount of debt you owe, but it will significantly lower your credit score and negatively impact your credit report.

The process isn’t as simple as debt consolidation. You have to convince every creditor that if they don’t settle with you, they probably won’t get anything at all. So, of course, during that time, you won’t be making any payments — while interest and late fees accrue.

You can do this on your own, but most people seek the help of a debt settlement company.

Like a debt management program, a debt settlement firm will negotiate debts on your behalf, and the company will make lump-sum payments to creditors while you make monthly payments to the debt settlement company.

While you’re paying the debt settlement company, you’ll still be delinquent with any creditors the company hasn’t yet negotiated with, meaning you’ll still get calls from those creditors.

And there’s no guarantee the company will be successful. If it isn’t successful in negotiating, you’ll still be responsible for the full debt amount, plus any extra interest that accrued.

If the company is successful, you’ll have to pay the settlement amount in full. Then in April, you’ll owe taxes on the amount forgiven.

The settlement company will also charge you up to 25% in fees on top of the settlement.

Learn how one Penny Hoarder paid off $12,000 in debt in just 12 weeks. She shares her top tips so you can get out of debt too.

Personal Bankruptcy

Bankruptcy is another last resort. The two major types for individuals are Chapter 7 and Chapter 13.

Chapter 7 bankruptcy allows you to completely discharge all your debts (except student loans) in four to six months by liquidating your assets. A trustee gathers and sells all of your nonexempt assets to pay off your debt. Those assets can include property that’s not your primary residence, a vehicle with equity, investments or valuable collections.

Those who earn a high income or have significant assets typically choose Chapter 13, which allows you to keep certain assets while still repaying some of the debts. It’s a long, arduous process that doesn’t guarantee to resolve your debt. It can be reversed if your income increases, and it wrecks your credit.

Both bankruptcy options have negative long-term ramifications on your credit. But if you’re out of options, bankruptcy gives you a chance to get your debt under control and get creditors and debt collectors off your back.

A woman looks at her bills at home.
Getty Images

FREE DOWNLOAD: Pros and Cons of Debt Payoff Methods

Steps to Decide Which Payoff Method Fits You Best

Deciding on the best method to pay off your credit card debt involves assessing your financial situation, personal preferences, and long-term goals. Here’s a step-by-step guide to help you determine which method might be your best fit.

Step 1: Assess Your Total Debt and Financial Situation

  • List all your debts: Write down every credit card balance, including the interest rate and minimum payment for each.
  • Evaluate your budget: Determine how much money you can realistically dedicate to debt repayment each month beyond the minimum payments.

Step 2: Understand Your Motivation and Preferences

  • Quick wins vs. long-term savings: Decide if you’re someone who needs quick results to stay motivated (favoring the debt snowball method) or if you’re more motivated by saving money on interest over time (favoring the debt avalanche method).
  • Consolidation preferences: Consider whether consolidating your debts into a single payment would make it easier for you to manage your finances.

Step 3: Consider Your Credit Score

  • Balance transfer option: If you have good to excellent credit, a balance transfer card with a 0% introductory APR might be a good fit. This requires a credit score of 670 or higher.
  • Loan options: Your credit score will also play a significant role in a consolidation loan. A higher score may qualify you for better interest rates.

Step 4: Evaluate Your Home Equity (If Applicable)

  • Homeowners: If you own a home and have equity, consider if a home equity loan or line of credit is a viable option for consolidating your debt at a lower interest rate. Remember, this puts your home at risk if you default.

Step 5: Analyze the Impact on Your Credit Score

  • Future financial plans: If you plan to apply for a mortgage, car loan, or another form of credit in the near future, consider how each method might impact your credit score.
  • Debt settlement: Understand that debt settlement can significantly damage your credit score and should be considered a last resort.

Step 6: Seek Professional Advice

  • Nonprofit credit counseling: If you’re unsure which method to choose, a session with a nonprofit credit counseling agency can provide personalized advice and even offer a debt management plan.

Step 7: Make Your Decision

  • Match method to situation: Based on your total debt, financial situation, credit score, and personal preferences, choose the method that best aligns with your goals.
  • Start small: If still unsure, you might begin with a method that requires less commitment, like trying the debt snowball or avalanche method, before moving to more complex options like loans or balance transfers.

Step 8: Implement Your Plan

  • Stick to your budget: Consistently apply your chosen strategy, and monitor your progress regularly.
  • Adjust as necessary: If your financial situation changes, reevaluate your method and make adjustments if needed.

Choosing the right debt repayment strategy is crucial for financial well-being. This step-by-step process is designed to help you consider all aspects of your financial life and ensure that the method you choose aligns with your personal and financial goals.

How to Pay off Credit Card Debt Fast

If you want to become debt-free quickly, here are some ways to pay off credit cards fast:

Increase Your Monthly Payments

Make two payments per month instead of one. Most credit card companies use an average daily balance to compute interest charges. Instead of making monthly payments of $400 toward a balance, make two payments of $200, one at the middle of the month and one at the end. You’ll lower the average daily balance so you’ll pay less interest. Some credit card users even advocate for paying off credit card balances every week; a weekly reminder in your calendar is all it takes.

Try to Get a Lower Rate

Ask your credit card companies for lower interest rates. It’s worth trying at least once for each credit card you have. Research competitor cards similar to yours for which you qualify and that offer better rates — then share those with your credit card company to see if they’ll match it.

Knocking four interest percentage points off a $10,000 balance, for example, can save you hundreds of dollars in interest annually. Add those savings to your debt repayment budget!

Get the Debt Reduced

Sometimes you can convince a credit card company to forgive your debt — or at least part of it. After all, these companies want to retain you as a customer, so they may be more open to negotiation than you might think. If you’re in serious financial trouble, explain the situation to the card issuer. Offer to pay a portion of the balance owed as payment in full.

For most of us, though, there’s no quick answer.

How Much Will Paying Off Credit Cards Raise Your Score?

You might ask yourself, “How much will my credit score go up if I pay off my credit cards?” Credit card usage has a huge impact on credit scores.

If you spend too much of your overall limit or miss payments, you’ll hurt your score. If you keep your balances low and regularly make your minimum monthly payment on time, your score will increase over time.

Just because you have available credit doesn’t mean you should max out your credit cards. Your credit utilization, which tells the credit bureaus how much of your available credit you’re using, shows whether you are sensible with your borrowing.

It is ideal to keep your credit utilization at or under 30%. That means on a credit card with a $10,000 limit, you wouldn’t want your balance to exceed $3,000.

Credit utilization accounts for a whopping 30% of your score. Other factors affecting your score include payment history (35%), credit history length (15%), credit mix (10%) and new credit (10%).

Looking for ways to increase your score outside of paying down your credit card debt? Check out our list of 10 moves you can make to improve your credit.

Credit card issuers make it easy to fall into the habit of overspending. The introductory APR offers, new credit card sign-up bonuses, and cash-back offers are designed to encourage us to use cards more frequently and think less about what items cost.

So if you ever want to be debt-free, you need to change the way you use credit cards.

Former Freelance Editor Janet Keeler, freelancer Tim Moore, former Staff Writer Jen Smith, and Senior Writer Mike Brassfield contributed to this post. 


  1. Average credit card debt in the U.S., Bankrate.
  2. Household Debt and Credit Report, Center for Microeconomic Data.
  3. Average Credit Card Interest Rate in America Today, LendingTree.