Guides / Credit and loans
Paying down credit card debt
Credit card interest is usually some of the most expensive debt there is. A clear payoff plan, and a way to stop adding new charges, is what gets the balance to zero.
The key ideas
- List every balance
- Write down each card's balance, APR and minimum payment. Your statement also shows how long payoff takes if you pay only the minimum.
- Avalanche method
- Pay the minimum on every card, then put every extra dollar toward the card with the highest APR. This saves the most interest.
- Snowball method
- Pay extra toward the smallest balance first. You pay a little more interest, but quick wins help many people stick with it.
- Balance transfers
- A 0% intro APR can help if you can pay the balance before the promotion ends. Transfer fees, often 3% to 5%, apply, and the rate jumps afterward.
- Call your card company
- Ask for a lower rate or a hardship program. It doesn't always work, but it costs nothing to ask.
Questions to ask yourself
- What is the total interest I paid last year?
- Can I free up even $50 a month to put toward debt?
- What will stop me from adding new charges while I pay this down?
Free help
- NFCC nonprofit credit counseling
- Find a nonprofit credit counselor through the National Foundation for Credit Counseling at nfcc.org.
- FTC on debt relief
- How to spot debt relief scams at consumer.ftc.gov.
This guide is general education for US households, based on how things typically work. Rules, rates and program details change and vary by lender and state. It is not individual financial, legal or tax advice, and it isn't an offer of credit. Pennies & More isn't paid by any lender or company mentioned here.