reduce credit card debt
Getting out of debt

How to Reduce Credit Card Debt





Credit card debt can be an overwhelming burden for many Americans. According to a report from Experian, the average credit card debt per American in 2022 was $5,525. With interest rates on credit cards averaging around 16-24%, this debt can quickly snowball out of control if not properly managed.

The good news is there are steps you can take to reduce credit card debt and get your finances back on track. In this article, we’ll outline 12 proven strategies to help you reduce credit card debt.

1. Make a Budget and Stick to It

The first critical step to reducing credit card debt is to make a budget. Analyze your income and expenses to see where your money is going each month. Look for areas where you can cut back on spending and allocate more money towards paying down your balances. Apps like Mint or EveryDollar can help with budgeting.

Once you make a budget, it’s important to actually stick to it. Continue tracking spending and adjust as needed until you find a budget that works for your lifestyle. Having a budget gives your finances focus and helps control mindless spending that leads to credit card debt.

2. Pay More Than the Minimum Each Month

One of the slower ways to pay off credit card debt is only paying the minimum amount due each month. This approach stretches out balances for years and results in hundreds or thousands of dollars wasted on interest payments.

Instead, aim to pay more than the minimum each month. Even if it’s only $20 or $50 more, this will save a significant amount of money over time. Pay as much extra as you can afford each month to knock down balances faster.

3. Consolidate to a Lower Interest Rate

Interest rates are one of the major costs associated with credit card debt. A higher interest rate means more money spent on interest charges each month. One way to reduce credit card debt faster is to consolidate balances to a lower interest rate.

You may be able to transfer balances to a card with a 0% intro APR for 12-18 months. Or consider consolidating through a personal loan or even refinancing your mortgage to pay off credit cards. This reduces the interest costs, allowing more money to go directly to paying down the principal balance.

4. Stop Using Credit Cards

It’s very difficult to get out of credit card debt if you continue relying on cards for spending. The balances will just continue growing.

A key step is to stop using your credit cards altogether. Put them away in a drawer and use cash or debit cards instead. This prevents you from incurring any additional credit card debt as you pay down existing balances.

5. Find Ways to Increase Income

Bringing in more income each month provides more money that can be put toward credit card payments. Options to increase income include:

  • Asking for a raise at your current job
  • Finding a higher paying job
  • Taking on a side gig or freelance work
  • Starting a small business on the side
  • Selling unwanted items

Even an extra $200-500 per month can make a significant dent in balances over time. The more income, the faster you can pay off debt.

6. Cut Expenses

Look closely at expenses to find areas to trim spending. Be ruthless in cutting any expenses that aren’t absolutely necessary. Here are some categories to consider:

  • Housing: Get a roommate or downgrade to a less expensive home.
  • Transportation: Use public transportation instead of driving.
  • Food: Cook at home, avoid restaurants, and create a grocery budget.
  • Utilities: Turn down the heat and AC and conserve energy.
  • Insurance: Shop around to find cheaper auto and home policies.
  • Subscriptions: Cancel unused subscriptions like gym memberships or streaming services.

Every dollar saved is another dollar that can go toward credit card payments. Cut expenses as much as possible to have the maximum amount available for debt payments.

7. Take Advantage of Tax Refunds

For most people, tax refunds represent one of the largest financial windfalls of the year. Instead of blowing your refund on vacations or shopping sprees, use it strategically to knock out credit card debt.

The average tax refund in 2022 was $3,263. That kind of payment could put a major dent in your high-interest credit card balances. Make tax refund time an opportunity to boost your credit card payoff progress.

8. Get a Balance Transfer Credit Card

As mentioned earlier, balance transfer cards offer a powerful way to reduce interest costs on credit card debt. These cards let you transfer existing balances from other cards and pay 0% interest for a 12-18 month intro period.

This pause in interest accumulation lets you maximize payments toward the principal during the intro timeframe. Focus on eliminating one card completely before the 0% APR expires. Balance transfer cards provide major savings compared to keeping balances on high-interest cards.

9. Prioritize Paying Down Highest Interest Cards First

The best approach is to focus any extra payments on the credit card with the highest interest rate first. List out all cards and minimum payments. Then put any additional money each month toward the card with the highest interest.

Once that card is paid off, roll that payment amount into the next highest interest card, and so on. This “debt avalanche” approach minimizes interest fees and shortens the time to becoming credit card debt free.

10. Consider Debt Consolidation Loans

Debt consolidation loans allow you to roll multiple credit card balances into one new loan. You get one fixed monthly payment at a lower interest rate, which helps pay off the debt faster.

Banks, credit unions, and online lenders all offer debt consolidation loans. Look for interest rates starting in the 5-8% range and terms from 3-5 years. This simplifies payments and can lead to thousands in interest savings.

11. Tap into Home Equity

If you’re a homeowner with equity available, turning to home equity loans or lines of credit can provide a lower cost way to consolidate and pay off credit card debt. The interest on home equity debt is generally much lower than credit cards.

This can make sense if you have excellent credit and significant equity available. Paying off cards with home equity converts high-interest debt into low-interest debt that can save you money over time. Just be sure to avoid tapping equity again after paying off cards.

12. Get Help from a Non-Profit Credit Counselor

Non-profit credit counseling agencies like provide assistance getting out of credit card debt. They can help analyze finances, set a budget, negotiate lower interest rates from lenders, and set up affordable debt repayment plans.

Getting help from a non-biased expert can make the process of paying down debt easier and more successful. Credit counselors provide customized guidance on the best path to become free of credit card debt.

Final Tips for Reducing Credit Card Debt

  • Automate payments to avoid missed deadlines and late fees
  • Pay more frequently than once a month to lower balances faster
  • Avoid cash advances which incur fees and high interest immediately
  • Monitor credit reports and scores regularly to catch any errors
  • Bring lunch to work and avoid convenience store purchases to save money
  • Put reminders around the house saying “Do you really need this?” to curb impulse spending
  • Stay disciplined and motivated focusing on the goal of becoming debt free



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