Updated on 08.18.17

Got Credit Card Debt?

Trent Hamm

Jon writes in:

I have a bunch of credit card debt spread across several different cards and I’m having a hard time getting started paying them off. You’ve offered a lot of little solutions for debt removal, but I need a plan I can execute to deal with these credit cards. How can I get rid of these debts?

Personal Finance 101I receive questions like Jon’s almost every week, usually involving a person who has realized that their credit card debt is completely out of control. They want to know what they can do to get out of the situation.

The most important thing to realize is that the best solution to credit card debt is a long-term one, not a “quick fix.” You’re going to need to make some alterations to your spending, because if you’re racking up that much credit card debt, you’re spending beyond your means.

Ten Step Plan For Credit Card Debt Relief

1. Hide Your Credit Cards
The first step is to hide your credit cards in a place where you could access them in an absolute emergency, but that they’d be very difficult to find. Put them in a little box way in the back up in the attic. Freeze them in a big chunk of ice. Hide them in the back of the cupboard at your mother’s house. Make sure it’s somewhere where you can’t easily access them.

Then, go to every online account where you use a credit card regularly and delete your credit card numbers there. Amazon. PayPal. World of Warcraft. All of them. Make sure that you’re not forgetting anything. If you absolutely must retain a service, use a debit card number instead of a credit card number.

Why do this? Your credit card balances need to go down, not up, and the biggest step in doing that is to break yourself of the habit of using them without a connection to the real money you’re spending. That means going back to using cash, checks, and debit cards – if you don’t actually have the money, you’re not spending it.

2. Figure Out What You Owe – And What The Interest Rates Are
The next step is to dig out the most recent statements for all of your credit card bills and determine exactly how much you owe and what the interest rates on each of the bills is. This information should be easily found on your most recent statement, but if you’re having difficulty finding the information, call up your credit card provider (the number on the back of the card) and get that information.

You should be making a list of all of these: credit card name/type, current balance, and interest rate. This way, later on, when you develop a plan, you can use this master list to figure out which credit card to pay first.

3. Request That The Companies Lower Your Rates
Now that you have all of your information at hand, go through them and try to get some of your rates reduced. For each card, call the phone number on the back and directly ask for a rate reduction. If you get a response that doesn’t give you what you want, ask to speak to a supervisor.

Some tactics:
+ Be polite, even if you don’t get what you want. Yelling won’t solve anything at all here and will likely reduce your chances of getting what you want.
+ State that you’re looking at transferring that balance elsewhere. This gives you at least some degree of leverage in the conversation.
+ Be realistic in your expectations. A 3% reduction IS a great success. If you have a $5,000 balance, 3% is a savings of $150 a year.

4. Look For Zero Percent Balance Transfer Offers
Once you’ve squeezed down the interest rates on your cards, see if there are any balance transfer offers available to you, either on your current cards or possibly on a new one (zero percent transfers are the best, but long-term ones that are lower than what you’re currently paying are solid, too).

Further reading: The best balance transfer cards for 2017.

The first place to look is with your current cards. Identify any balance transfer offers available with these (read the statements carefully) and note the interest rates and the term (the longer the term, the better, as after that term, you’ll start paying more interest).

Then, start transferring! Transfer your highest remaining card balances first and keep moving down the list until your interest rates are as low as possible. By this point, your master list has probably gone through lots of chicken scratches and revisions, so it might be worthwhile to just rewrite the whole thing with your current balance levels.

You should note that quite often doing balance transfers will result in a card having some of the balance at a certain percentage and the rest at another percentage. Since you often can’t control which portion of the debt you’re paying, I usually recommend figuring out the average interest rate for that card. So, let’s say you have $10,000 total on that card, with $7,000 at 3.9% and $3,000 at 18.9%. Just take $7,000 times 3.9 and add it to $3,000 times 18.9 to give you 84,000, then divide that by the overall bill total, $10,000, to give you 8.4%. This is the interest rate you should consider that card to have – it’s not perfect, but it’s a good thumbnail sketch. Recalculate it on occasion when you get a fresh new bill, as it will likely slightly adjust over time.

5. Look For Personal Loans
Your list of credit card debts should be looking a lot better, but let’s see if we can improve it even more by getting a personal loan. Stop by your local credit union, show them your credit card debt list, tell them your story, and ask if they have any options for consolidating these debts further. If your credit is still strong, you may be eligible for a personal loan; if not, you may still be able to get a solid loan anyway with some form of collateral (a home or something else of value).

Again, only accept such a loan if you’ve got a credit card debt with a higher interest rate still outstanding. If you can’t get a personal loan that beats any of your remaining credit card debts, don’t get one.

6. Liquidate
The next step is to liquidate some of your unnecessary possessions and use the proceeds to pay off the highest interest debts remaining. We all have stuff laying around that we don’t really need. When I went through my debt crisis, I liquidated a great deal of stuff – DVDs, video games, CDs, baseball cards, books, Magic: the Gathering cards, and some sports equipment went out the door in short order. Why? I wasn’t really using them and I knew that I could get some significant cash for all of that stuff.

Take a frank look at all of your possessions and ask yourself honestly which ones you actually are using regularly and which ones are gathering dust in the recesses of your shelves or the back of your closet. Then dig out those items and get some value for them. My recommendations:

+ Sell items that have significant individual value online, such as CD or DVD box sets, high-value individual trading cards, and so on. Those items will recover the value of the time you put into selling them online – most ordinary items won’t.
+ Take the rest of your unwanted items and attempt to sell them through appropriate dealers. Look to used media shops and collectibles dealers for places to unload the remainder of your items. If you’re trying to sell clothes, go to a consignment shop.
+ If there’s anything left, make a detailed list of it, take it to Goodwill, and get a receipt. This will help with taxes next year and you can use that tax rebate to help with your debt situation.

7. Develop a Debt Repayment Plan
Hopefully, your interest rate reduction efforts and your big sell-off have made your credit card situation a lot less scary. Now it’s time to develop a debt repayment plan. There are two big options.

The Dave Ramsey “Debt Snowball” plan means that you make a minimum payment on each debt, then make a large extra payment each month to the debt with the lowest balance. This will allow you to feel the success of eliminating a debt the fastest.

The fastest plan means that you make a minimum payment on each debt, then make an extra payment each month on whichever debt has the highest outstanding interest rate. This is the fastest route overall, but it doesn’t have that sense of success as quickly as Ramsey’s plan has.

Ramsey’s plan is easier to follow through on. The fastest plan will get you to debt freedom slightly faster. Both work. It’s up to you.

8. Practice Frugality and Snowflake
If you want to keep this train of positive progress going, the key is to learn how to be frugal in your day to day life. Look for ways to cut out unnecessary spending everywhere you look.

The best place to start is to evaluate your daily routine. Could you be using energy more efficiently? Is there anywhere you stop every day (or almost every day) to spend money? That’s likely a great thing to cut out of your routine.

How can this help? I like the technique known as snowflaking. Each time you make a choice that saves you money, immediately go home and take that much out of your checking account and put it into your savings. At the end of the month, sweep that total out and send it in as an extra debt payment. That way, you can directly see your frugal actions transformed into debt reduction.

9. Stick To That Plan With The Help Of Automated Payments
One way to ensure that you stick to the plan is to set up automatic payments through your credit card company and your bank.

Here’s one clever tactic. Set things up so that the credit card companies execute minimum payments automatically from your checking account. Then, set up with your bank a large extra payment each month to the credit card that you’re focusing on paying off. This way, you know your minimum payments are always correctly covered, plus you’re making a significant extra payment each month on one of your cards, too.

With everything being automatic, you don’t have to worry about anything other than making sure there’s plenty in your account to cover the transfers, and you can do that by learning how to be frugal with your spending. This plan also ensures no late fees or other unnecessary extra charges that you might accrue.

10. Don’t Stop
It might be tempting to stop this plan and go back to your old ways once the credit cards are under control.

Don’t. Reverting to your old habits will just cause this nightmare scenario to come back.

Instead, once your cards are paid off, start saving that money for your bigger dreams. Set up an automatic transfer with your bank into a savings account or an investing account each week so that you’re automatically saving. Eventually, that money can be used to buy a car or help you cover the down payment for a house – a much better outcome than a continuing spiral of credit card debt!

Good luck!

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  1. Johanna says:

    Nitpick: If you need to get the contact information for your credit card provider from the back of the card, shouldn’t you do that before you hide your cards?

  2. Frugal Dad says:

    Good strategies – I can appreciate the one recommending deleting credit cards from various online profiles. I made the mistake cutting up my cards, but leaving the card numbers as part of my profile at Amazon, and a few other places. This made it tempting to still make purchases there even though I no longer had the physical card.

  3. Chris says:

    Re: point #4. It’s important not just to look at low interest rates on transferred balances, but also at the balance transfer fee (if any). A 3 or 4% fee to transfer the balance to a new card can significantly affect the savings you get from transferring to a lower rate (especially if you transfer a large amount). It may still be a good idea to transfer, but if you’ve got a choice, look for a card that offers no balance transfer fee as well as a a low BT interest rate.

  4. Wil says:


    Good post. I personally would omit #4, and move straight to #5 (but only as a very last resort) because shifting around debt is not eliminating it. If a person with three cards has gotten themselves in a pickle, what will having an additional loan change?

    The fastest plan is really the most important part of all of this (IMO).

  5. JLD says:

    Say you have 2 credit cards: one with $5,000 and 8% interest, and the other with $2,000 at 10%. The “fastest plan” you recommend would have you pay off card #2 first, but wouldn’t it be better to put the money towards card #1? The interest rate is lower, but the balance is so much higher that you are actually paying more in interest per month on card #1. Wouldn’t the best plan be 1.) Figure out how much you are paying in interest each month on each card 2.) Put all the money towards the card that collects the most interest 3.) Periodically recalculate the interest payments on all your cards and adjust your debt repayment plan accordingly?

  6. Dana Seilhan says:

    Good post. Couple of points:

    1. @Wil: This is not just “shifting around debt,” it’s reducing debt. Why? Because you’re not paying as much in interest. If you want to get your debt paid off faster and you have access to a lower interest rate for a particular balance then you should take advantage of it if speed of payoff is one of your goals.

    I agree it’s not for an unreformed spendthrift–better to keep the old interest rate than to rack up more in principal–but if you REALLY want to pay off debt and are changing your behavior in order to accomplish that goal, there’s nothing wrong with shifting to a lower-interest-rate balance or with consolidating.

    2. One of the benefits of Dave Ramsey’s way of doing it is that you wind up with fewer debt accounts a lot quicker. This leads to a faster improvement in your credit score. Even if you never intend to take out another loan or take on another credit line, insurance companies and other entities judge you by your FICO score so you might as well get it as high as possible as quickly as possible. For instance, it’s already expensive enough driving a car thanks to gas prices–you don’t want to be paying more than necessary in auto insurance premiums as well.

  7. Marue says:

    Aren’t those low interest rate card offers just temporary? Before long your introductory rate card has become worse than your original rate with the other company. Sometimes auto payment arrangements will lower your rate too.

  8. jtimberman says:

    Rather than hiding the cards, or freezing them, I would cut them up. Hard to use a card when it is destroyed.

  9. aria says:

    Highly recommend http://www.whatsthecost.com/snowball.aspx to organize your snowball and compare savings of paying off lowest balance vs. lowest %.

  10. Mark B. says:

    Thanks Trent, I needed this. I have hit my financial turning point, I cannot stand this debt any longer and job 1 is to eliminate it.

  11. Joe T says:

    Be mindful of fees with 0% and low interest balance transfers. Most cards charge 3% of the balance, usually with a cap of around $100. It can be less expensive to leave a balance where it is rather than pay the fee to transfer it to a lower interest rate card, especially if the balance is relatively low or the low rate period is relatively short.

  12. MaxPower says:

    I think the best thing to do is to get a personal loan and close the credit card accounts. It probably will affect your credit score but at least you’ll be out of debt.

  13. Eden says:

    This is a battle I’ve been fighting now since last September when I woke up and realized I had about $25,000 in credit card debt. Since then I have paid off just under $10,000 of credit card debt. I still have a way to go, but I have a plan and I know it works.

    Get on a budget.
    Stop using credit cards.
    Sell all the junk you can find in your house.
    Send all the extra money in your budget each month to your debt payments.
    Give it time.

    That’s all it takes really. The speed with which you can pay off the debt is influenced by how hard you work at earning more money and spending less money.

    Best of luck to ya!

  14. Tricia says:

    Another suggestion: Have the credit card company change your credit card number. Because there are those of us who use the card so often that it’s embedded in our brain and we don’t NEED the card to make an online purchase (so embarrassing but it’s true LOL)

  15. Great point about taking the card numbers off of online accounts! It’s so easy to look something up and in a weak moment … blammo! Amazon’s gotcha.

  16. Anne says:

    Great post. I also like Dave Ramsey’s method because it frees up cash flow faster. Having fewer bills to pay puts you in a better situation if you find yourself unemployed or with an unexpected expense.

  17. Mark says:

    One caveat about #9:

    If you’ve even been late with payments or somehow gotten on the wrong side of your credit card company DON’T allow the credit card company access to your checking account. There is the possibility they will clean you out for any late payments, penalties, etc, that they feel like assessing.

    I’ve heard enough horror stories of people promising to pay a certain amount, giving access to the checking account for automatic payment and then bouncing a rent check or having the debit card denied at the grocery store because the card company took everything they could get their hands on.

  18. !wanda says:

    In addition to #1: Turn off your browser’s autocomplete function or clear its “saved form and search” cache.

  19. IT Pilgrim says:

    I love this post. I wrote up something along the same lines a few days ago, though it hasn’t published yet (I will push it out now). I however, went way further with the process and took a second job to pay my cards off. I am just curious if anyone else has ever done that?


  20. Andrew says:


    One of your best posts in a long time. This one was right on the money and you covered everything. You are right when you say there is no quick fix. It is extremely hard work, but we know that the best feelings in thw world come as a result of working hard and achieving something.

  21. John says:

    Wait, you played Magic: The Gathering? lol. Ahh the “good old days”…

  22. clint says:

    Love it! Credit card debt is really bad…evil even. Anything we can do to get out of debt is good. If you can avoid credit card debt it is even better. This is some tips. http://www.a-debt-free-life.com/avoidcreditcarddebt.html

    Thanks for the post.

    Clint Lawton


  23. Trev says:

    One thing that I’ve found effective:

    Tally up ALL your spending for the past 6 months, and categorize it (use statements and receipts for this). This takes a lot of time and effort, but it’s worth it: you’ll see where you’re spending unnecessarily very clearly.
    Find where you can trim a few bucks here and there, and when you have that total, apply that to your highest interest rate credit card payment.
    It’s a plan that’s easy to follow through on, because it teaches you, by it’s very nature, to curb your spending in every day things so you can stay committed to that extra payment.
    From there on, it’s a debt snowball.


  24. MoneyRemix says:

    I’ve used the balance transfer option a number of times to move a pesky Discover card balance around and it’s a great feeling knowing that I can get year after year of 0% interest on the balance as I steadily pay it off.

    It’s worth noting though, using this method of debt reduction too frequently can temporarily ding your credit score.

  25. Connie says:

    Re: “Each time you make a choice that saves you money, immediately go home and take that much out of your checking account and put it into your savings”.

    While I agree that snowflaking is a good idea, if you do online banking you need to be aware of Federal Regulation D, which allows a maximum of 6 online transactions per statement cycle on savings accounts.

  26. DB says:

    @Connie wrote “While I agree that snowflaking is a good idea, if you do online banking you need to be aware of Federal Regulation D, which allows a maximum of 6 online transactions per statement cycle on savings accounts.”

    Huh? I do online banking through my credit union and do FAR MORE than six online transactions per statement cycle. Every two weeks (when I get paid) I move a lot of money around between various accounts. Nobody (my credit union, etc) has ever mentioned anything about any government regulation…?

  27. wil says:


    On paper, you are absolutely right, however after years (and years) of seeing this in practice, what most often happens is that a person with two maxed out cards of 5k each (for example only) gets a 10k card with 0% to “consolidate”. They still have 10k worth of debt, they still have all the “emergencies” that encouraged the overuse of credit in the first place, but now they have the capacity of 10k more! They don’t want to close the old cards to protect their credit rating (presumably these are older cards), so they have actually created the means to double their debt load. If that same person got a fixed term loan, this is only slightly mitigated, but if in truly dire straits sometimes needed.


    Regulation D is designed to protect the reserves of the institution, and it does mandate no more than six transfers from savings unless the customer or member does them “in person”. Some institutions consider online transactions through the bank or credit union to be “in person”, while others consider in person to only be in front of a teller at the branch. There really is no standard that ALL institutions follow.

  28. Anne says:

    Wil is right; Reg D restricts transfers FROM savings, not deposits INTO savings. Trent was referring to the latter.

  29. tjwriter says:


    You are absolutely write with your post. If you have several credit cards with several different balances at several different interest rates, it pays to factor in how much the finance charge is for each card each month.

    Going with the highest APR method really is only truly effective if the balances are all the same. The only real variable left is then the APR.

    I figured up spreadsheets approximating (off by maybe a dollar or two) the finance charge each month for all of my cards, which have all sorts of balances and interest rates, then applied the three methods. Making your large payment to the card with the highest finance charge each month came out months ahead in terms of paying off all the balances.

    It looks at which card costs you the most each month and working to eliminate that cost. It requires a lot more maintenance and focus, but if you evaluate all your statements each month, it should not be difficult to find the one that is costing you the most each month.

  30. Dawn says:

    I did things a bit differently and it has worked out well–a lot of minimum payments was getting us nowhere, so I found a credit card with a 3.99% interest rate for the life of the balance, and transferred all of my credit card balances to it. (it had a maximum balance transfer fee of $25 per transaction, which was pretty cheap in my case).

    Having only 1 payment per month means that I don’t accidentally miss payments, and having a locked in interest rate means I don’t have to open another account at any future time.

    I figured out an amount I could comfortably pay. it ended up being the interest each month plus $300. This was not a stretch, and not intended to be. In fact, it was about the same as the 3 minimum payments plus what I was trying to put on them to make them go down. I pay it religiously just like the mortgage and student loans. Even when the interest went down, I kept paying that amount. I also put extra on it now and then, and whenever it is close to a milestone, I add it (so, when it was at $11,090.18, I paid the $350 plus 90.18).

    I would also suggest start putting $25 a paycheck (or slightly more) into an emergency fund. What my husband and I found was that we had a cycle. We would get a bonus in December and pay off our credit card entirely, but had no savings. Then, we would have a problem (major car repair) and have to charge it. by the next December, we were right back in the same debt plus some.

    So, this past year, we did it differently. 1/3 of each bonus, tax refund, etc. went into savings, plus $50 a month ($25 a paycheck).
    With the emergency fund, I have not had to charge anything, and the debt goes down. This was an even more helpful thing for us than paying down the credit card.

    Could we pay it off faster if I tightened the belt? Probably, but at this point, I would rather have a reliable slow and steady plan that works than something that is a constant source of stress.

    Then, I started a spreadsheet on excel to track what we spent and when we spent it. this was eyeopening and helpful. For instance, now I know that I need to plan for the month of May, when my car insurance, house insurance, and two other signficant expenses come due. So, this year, I took part of the bonus, and put it into a “May fund” May no longer disrupts us.

    We also found out we eat out almost exclusively on Sunday morning. So, we made that a no eating out morning. Our eating out bill went down by 70%.

  31. Ann at One Bag Nation says:

    So much great information, I don’t know where to dig in first!

    We’ve been living debt-free (except for mortgage) for several years, but due to various emergencies (for which we didn’t have enough set aside) we now have a balance on two cards. It feels terrible, but after reading this post, I think I can put a good plan in place.

    Thanks, Trent and commenters!

  32. Lorna says:

    Can you tell me what credit card you found with a Balance Transfer fee of only $25 maximum per transaction?

  33. susan says:

    When my husband and I decided we’d had enough, we got rid of the credit cards, put all our balances into our HELOC (for the lower rate & the tax deduction) and I got a 2nd (and 3rd) job to pay down the balance. We’ve paid off $12,000 so far (with still a ways to go), but the balance is going DOWN instead of up.

    I know some people say you’re crazy for trading unsecured debt (credit cards) for secured debt (the HELOC), but we were changing our ways, and between the mortgage & what is due on our HELOC, we’d still be fine if the house had to sell tomorrow. No worries.

    And of course, by working 2 p/t jobs in addition to a f/t one, there isn’t much time to get into more spending trouble. :)

  34. Jason says:

    My grandmother always told me there is a great place to go when you’re broke…to work!!

    Get an extra job and pay off those debts faster.

  35. katy says:

    I just went to amazon & alibris and deleted my cc info. thanks for a good reminder!

    I just paid off my irs bill – but didn’t leave a prudent reserve…odat.

  36. Tim says:

    The best piece of advice was to be calm and polite and ask to speak with the manager. The first person told me there was nothing they could do to help me. The manager said they can definitely help me! My rate went from 16.99 to… (seriously, I’m on the phone now listening to music as he figures out how much they can help me) … prime + 3.9 or 8.9%!!! Thanks for this suggestion!

  37. ellie says:

    What a wonderful website. I am in credit card debt and trying to get out. The articles and all the post are so helpful.. Sending The Simple dollar to all my friends and family. Some so they won’t get it debt. Thanks again for all that you do.

  38. Coles Myer says:

    I haven’t encountered that kind of problem yet that’s hwy I’m glad I visited this website and read your post. Now I know what to do when I will encounter this kind of problem in the future.

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