How to Pay Off Credit Card Debt | Capital One (2024)

March 14, 2024 |8 min read

    If you’re working to pay off credit card debt, you probably understand a lot of the ways it can affect your finances. Whether you’re tackling debt that has grown slowly or you’re working to cover an unexpected expense, coming up with a plan can feel daunting.

    Here are some tricks for tackling credit card debt that might help you get started.

    Key takeaways

    • Paying off credit card debt may help you save money on interest and help you improve your credit scores.
    • Choosing an effective debt repayment strategy, building a budget and tracking your spending could make paying off debt more manageable.
    • You may find debt relief options available if you contact your credit card issuer.

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    1. Understand how the debt happened

    Figuring out how you got into debt may help you avoid issues in the future. Try going over your credit card statements from the past few months to find patterns. Are there places where you can make some changes to your daily or monthly spending?

    For example, maybe you can cancel your gym membership and work out at home. Maybe you can cook more at home instead of dining out.

    If your credit card debt was the result of a large, unexpected expense, you could make a plan to create an emergency fund. This could help provide a cushion the next time something pops up.

    2. Consider debt payoff strategies

    Creating a repayment plan can help you figure out what works best for you and even help provide motivation. There are two basic strategies that can help you reduce debt:

    • Pay off high-interest debts first. Using a strategy called the debt avalanche method, you make the minimum payments on all your debts and put extra money toward the balance with the highest interest rate. Once that debt is paid off, you put any extra money toward the balance with the next-highest interest rate and so on. This strategy can help you save money in the long term because high-interest debts are more costly.
    • Pay off the smallest debts first. If you would rather build momentum, the debt snowball method might make more sense. With this strategy, you make the minimum payments on all your debts but then focus on putting any available money toward paying off your smallest balance first. Once you’ve paid that off, you can dedicate any funds that have been freed up to your next smallest debt and so on.

      3. Pay more than the minimum

      You should always pay as much of your full credit card balance as you can, according to the Consumer Financial Protection Bureau (CFPB). Paying more than the minimum payment can help in a couple of ways, including:

      • Reducing your debt more quickly. Paying more can help cover interest charges and decrease the total balance on your credit card.
      • Limiting the interest you’ll owe over time. The less interest charged, the lower your minimum payments could be.

      4. Reduce spending

      When you reduce spending, you can put more money toward debt and potentially even save money on interest. Here are some ways to manage your spending:

      • Create a budget. There are lots of different ways to budget, but in general, it goes something like this: List your monthly expenses, such as rent, utilities and groceries, along with your debts, such as credit card balances and student loans. Write down how much you earn each month, and subtract your bills and minimum required debt payments. The amount you have left over is a starting place to consider how much extra to put toward your debt payoff each month. You might even take advantage of your credit card’s features to help you budget.
      • Set a goal. Once you know how much debt you have and how much you can pay toward it each month, figure out how long it will take to pay off the debt. Mark that date on your calendar. Having a goal in mind can keep you focused and motivated.
      • Track your spending. Use whatever tracking method works best for you, whether that’s an app, a spreadsheet or a pen and paper. Write down everything you spend money on, and review the log every few weeks. This is a good way to better understand your spending habits and maybe even find areas where you can cut back.
      • Tell a friend or family member. If they know you’re working toward a debt payoff goal, your loved ones may be able to offer support. They might also help you think of ways to budget or fun things to do for free, both of which could help you stick to your goals.

      5. Switch to cash

      While you’re paying down debt, it may be helpful to pay for things in cash so you’re not increasing your credit card balances. And if you need to use a card for payments, consider using a debit card so you’re not borrowing money.

        6. Consolidate or transfer your credit card debt

        Debt consolidation allows you to combine multiple balances into one. Some people use a credit card balance transfer or a debt consolidation loan for this purpose.

        A balance transfer credit card offer lets you move unpaid debt from one or more accounts to a new credit card. These cards often come with a lower interest rate for a limited time, which could help you save money if you’re approved. But the lower promotional interest rate will eventually increase. So it’s a good idea to try to pay off the balance before that happens.

        For example, let’s say you have $5,000 in credit card debt and you open a balance transfer credit card with a 0% introductory annual percentage rate (APR). If the promotional period lasts 18 months, then you’d need to pay about $278 a month to pay off the balance before the interest rate increases. To make a more informed decision, it’s a good idea to check whether the card charges balance transfer fees—and how much they may be—and to understand the card’s terms and conditions before you apply.

        A debt consolidation loan may work similarly to a balance transfer card. Debt consolidation loans are personal loans you can use to pay off multiple debts and convert them into one monthly payment. Then you make payments on the loan balance until you pay it off in full.

        But debt consolidation loans often charge interest, so you could end up paying more per month than you’d planned—or erase any potential savings.

        7. Consider debt relief options

        If you’re having a hard time keeping up with your credit card debt, the CFPB recommends reaching out to your credit card issuer and asking about options that may be available to settle credit card debt.

        According to the CFPB, “Many credit card companies may be willing to help if you’re facing a financial emergency.” The CFPB goes on to say that you don’t have to be behind on your monthly payments to ask for debt relief assistance either.

        If you’re having trouble with your monthly payments, you can try contacting your credit card issuer as soon as possible. Rather than letting debt and missed payments stack up, reach out to see what your options are.

          Paying off credit card debt FAQ

          Find answers to commonly asked questions about paying off credit card debt.

            The CFPB describes two basic methods to pay off credit card debt: the debt avalanche method and the debt snowball method. The CFPB also suggests creating a debt repayment plan and budget to stay on top of your credit card balances, track expenses and stay one step ahead of your credit card debt.

            Most credit card issuers don’t allow you to pay off one credit card balance with another credit card. And using a credit card to pay off another balance may not make debt more manageable in the long run.

            A large credit card balance can affect your credit because credit scores are partially based on your credit utilization. And using too much of your available credit can push you past the 30% utilization rate that experts recommend. Low credit scores can affect your ability to qualify for new loans, credit cards and lower rates.

            While it’s not easy, paying off credit card debt is possible if you set up a practical debt payoff plan. Tracking your spending can also help. Plus, once you start paying down your credit card balances, your credit scores may start to improve.

            With the debt avalanche method, you could target the balance with the highest interest rate first. With the debt snowball method, you could target the smallest balance first. Depending on your situation, both tactics could help.

            How to pay off credit card debt in a nutshell

            Paying off credit card debt can feel daunting. But with some research, an effective plan and consistency, you can get one step closer to paying off debt and improving your credit scores.

            CreditWise from Capital One makes it easy to monitor your credit by showing you factors that affect your credit scores. Plus, you can use the CreditWise Simulator to see how paying off credit card debt or transferring a balance could affect your scores. CreditWise is free for everyone—even if you don't have a Capital One account. And using it won’t hurt your credit.

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            FAQs

            What is the fastest way to get out of credit card debt? ›

            Having a concrete repayment goal and strategy will help keep you — and your credit card debt — in check.
            1. Pay more than minimums. ...
            2. Take the debt snowball approach. ...
            3. Use the debt avalanche method. ...
            4. Automate your payments. ...
            5. Consider a personal loan. ...
            6. Think about a debt management plan. ...
            7. Decide if you want to pursue debt settlement.
            Aug 14, 2024

            How to pay off $5000 in debt in 6 months? ›

            If you can afford to pay off your debt during the promotional APR period, a balance transfer card may be your best bet. For example, with $5,000 of debt, a six-month intro APR balance transfer card would allow you to pay off your debt interest-free with $833.33/month payments.

            Is there really a government debt relief program? ›

            Key Takeaways

            There aren't any free government debt relief programs for credit card or personal loan debt other than bankruptcy. Many types of government debt relief exist in the form of grants and low-interest loans for specific purposes.

            How to pay off $10,000 credit card debt? ›

            Here are four of the fastest ways to pay off $10,000 in credit card debt:
            1. Take advantage of credit card debt forgiveness.
            2. Consider credit card debt consolidation.
            3. Use your home equity.
            4. Ask your lenders about financial hardship programs.
            May 22, 2024

            How do I pay off debt if I live paycheck to paycheck? ›

            Use a debt management program to make your debt more affordable. With a debt management program, you work with a credit counselor to create a repayment plan for your debt. During this process, the counselor will try to negotiate with your creditors to reduce the interest rates and fees on your credit cards.

            How to get rid of $30,000 credit card debt? ›

            How to Get Rid of $30k in Credit Card Debt
            1. Make a list of all your credit card debts.
            2. Make a budget.
            3. Create a strategy to pay down debt.
            4. Pay more than your minimum payment whenever possible.
            5. Set goals and timeline for repayment.
            6. Consolidate your debt.
            7. Implement a debt management plan.
            May 23, 2024

            How to wipe credit card debt? ›

            Outside of bankruptcy or debt settlement, there are really no other ways to completely wipe away credit card debt without paying. Making minimum payments and slowly chipping away at the balance is the norm for most people in debt, and that may be the best option in many situations.

            How to aggressively pay off debt? ›

            The snowball method focuses your repayment efforts on your smallest debts, regardless of your interest rates. With this strategy, you'll rank what you owe from the smallest balance to the largest. Then, pay the minimum amount each month on all debts, but focus the majority of your efforts on that smallest account.

            How do I pay off debt if I don't make enough money? ›

            However, even those on a low income can take steps to get out of debt.
            1. Know what you owe. Before doing anything else, take a deep breath, sit down and determine what you owe and to whom. ...
            2. Create a budget. ...
            3. Resist taking on new debt. ...
            4. Pick a paydown method. ...
            5. Examine other options. ...
            6. Earn extra money.
            Aug 1, 2024

            Do credit card companies forgive debt? ›

            Credit card companies rarely forgive your entire debt. But you might be able to settle the debt for less and get a portion forgiven. Most credit card companies won't provide forgiveness for all of your credit card debt. But they will occasionally accept a smaller amount to settle the balance due and forgive the rest.

            How to ask for debt forgiveness? ›

            The borrower can apply for debt forgiveness on compassionate grounds by writing about the financial difficulties and requesting the creditor to cancel the debt amount.

            Can the government pay off my credit card debt? ›

            While there isn't a specific credit card debt relief program operated by the government, several options are available that can help you manage and reduce your debt.

            Is national debt relief legitimate? ›

            Is National Debt Relief legit? National Debt Relief is a legitimate debt settlement company founded in 2009. It's accredited by the Better Business Bureau (BBB) with an A+ rating and holds an accreditation from the American Association for Debt Resolution (AADR).

            How long will it take to pay off $20,000 in credit card debt? ›

            It will take 47 months to pay off $20,000 with payments of $600 per month, assuming the average credit card APR of around 18%. The time it takes to repay a balance depends on how often you make payments, how big your payments are and what the interest rate charged by the lender is.

            How to cut credit card debt in half? ›

            To reduce your credit card debt, try to pay as much of your balance as you can at the end of the month. If you have several credit cards, try to pay off the one with the highest interest rate first. Make sure you at least meet the minimum payments each month. One missed payment can seriously damage your credit rating.

            How can I legally get rid of credit card debt? ›

            The most straightforward way to have your credit card debt legally forgiven is to file for bankruptcy. When you file for Chapter 7 bankruptcy, commonly known as liquidation bankruptcy, your assets above certain exempt amounts are sold off to repay as much of your debt as possible.

            How can I settle my credit card debt with no money? ›

            Debt settlement programs are typically offered by for-profit companies to people with significant credit card debt. The companies negotiate with your creditors to let you pay a “settlement,” or lump sum of money that's less than what you owe. They agree that this amount will settle your debt.

            How do I dig myself out of credit card debt? ›

            How to pay off credit card debt
            1. Try the avalanche method.
            2. Test the snowball method.
            3. Consider a balance transfer card.
            4. Get your spending under control.
            5. Grow your emergency fund.
            6. Switch to cash.
            7. Explore debt consolidation.
            Sep 5, 2024

            How do you get a credit card debt dismissed? ›

            If you pay off your debt or negotiate an agreement with the debt collector to pay a lesser amount before going to trial, you can settle your case and have it dismissed. But be aware that your case won't be dismissed automatically if you settle. Make sure the Plaintiff dismisses the case.

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