How to pay off credit card debt: a step-by-step plan

Step 1: list every card in one place

Write down each card with four numbers: the current balance, the APR (the interest rate, printed on your statement), the minimum payment, and the due date. If a card has a promotional rate, note when it ends and the rate that replaces it. If one card has several balances, such as purchases and a balance transfer at different rates, list those separately too.

Seeing the total in one place is often the hardest part. It is also the first moment you can make a real plan rather than paying whatever each bill asks for.

Step 2: stop the balances from growing

No payoff plan can outrun new charges. While you are paying down, move everyday spending to a debit card or cash. Remove saved card details from shopping sites and apps, and move any subscriptions billed to those cards onto a debit card, or cancel them.

Closing the cards is usually not necessary and can lower your credit score, because it reduces your available credit. Putting them out of reach is usually enough.

Step 3: build a small cushion first

It sounds backwards to save while carrying expensive debt, but without any cushion the next car repair goes straight back on a card and undoes months of progress. Many people set aside a small starter emergency fund, enough for a common surprise expense, before putting everything extra toward the cards. Once the cards are gone, build it up properly.

Step 4: automate every minimum payment

A missed payment brings a late fee and can trigger a much higher penalty rate, and a payment more than 30 days late can be reported to the credit bureaus. Set up automatic payments for at least the minimum on every card, so nothing goes late while you concentrate your extra money elsewhere.

Step 5: choose a payoff order

Any money beyond the minimums goes to one card at a time. When that card is paid off, its payment rolls onto the next. The two common ways to choose the order are the debt avalanche (highest interest rate first, which costs the least) and the debt snowball (smallest balance first, which gives the quickest early wins).

Both beat spreading extra money evenly across the cards. Run your own numbers through both before you pick; our guide to snowball and avalanche explains how to choose.

Step 6: find the extra payment

How much you pay above the minimums matters far more than which order you choose. Some places people typically find it:

• Subscriptions and memberships you no longer use. Go through two months of statements line by line.
• Insurance, phone and internet plans. Asking for a better rate or switching providers often saves a meaningful amount every month.
• Windfalls: tax refunds, bonuses, gifts, and the extra paycheck months if you are paid every two weeks. Sending these straight to the target card makes a large dent.
• Selling things you do not use.
• A fixed payment instead of a shrinking minimum. Minimums fall as the balance falls. Keep paying the same amount each month and the extra goes straight to principal.

Step 7: consider lowering the interest rate

A lower rate means more of every payment reduces the balance. The main options:

• Ask your card issuer. A call asking for a lower APR, especially with a history of on-time payments, sometimes works and costs nothing to try.
• Balance transfer card. A promotional low or 0% rate for a set period can save a lot, but there is usually a transfer fee of a few percent of the balance, and the rate jumps when the promotion ends. Only worth it if you can pay the balance off, or most of it, before then, and stop adding new charges.
• Personal consolidation loan. A fixed-rate loan pays off the cards and you repay it in fixed installments over a set term. It only helps if the rate is lower than your cards and you do not run the card balances back up.
• Nonprofit credit counseling. A debt management plan through a reputable nonprofit agency can negotiate lower rates with your issuers. Be wary of for-profit "debt settlement" companies that charge large fees and can damage your credit.

Step 8: track progress every month

Update your balances once a month and watch your debt-free date. Early on, much of each payment goes to interest and progress looks slow. As balances fall, more of each payment goes to principal and the date starts moving faster.

That acceleration is easy to miss if you only look at balances, and it is exactly what keeps people going through the middle months, when nothing seems to change.

When to get help

If the minimums alone take more than you can afford, or the balances rise even though you pay every month, a plan on its own may not be enough. A nonprofit credit counselor can review your full situation for free or a low fee and explain the options, including a debt management plan. That is a far better first call than a company that promises to make debt disappear.