#Here are my 4 top tips for paying off your credit card debt

If you’re carrying more credit card debt than you care to think about, you’re not alone. Among the generations, Gen Xers carry the largest average credit card balance of $9,123, with baby boomers not far behind, at $6,642, according to Experian.

Your credit card debt might also be higher this year, and so it’s time to start thinking about how to pay it off. If you’re like most Americans, you could be carrying four figures of credit card debt at an average interest rate of 21.59%, which doesn’t bode well for your financial future. Yes, you can continue making the minimum payments on your credit cards and maintaining a good credit score, both of which can help you to get through the day. But I want you to thrive, not survive, as you plan for or enjoy retirement — and that requires a shift from short-term to long-term thinking.

You don’t need to tell me that this might be a difficult endeavor. With the average credit card debt a costly $6,501, I’ll let you do the math on how quickly that debt might grow with an APR of 21% or higher. You can probably understand why nearly 9% of card balances “transitioned into delinquency” in 2023, to borrow the New York Fed’s turn of phrase. My goal is to help you avoid becoming part of that growing percentage.

Here’s a step-by-step plan to help you get started with paying down high-interest credit card debt.

1. Figure out how much you owe

Your first task is to figure out exactly how much credit card debt you’re currently carrying. If you use a personal finance or budgeting app like YNAB or Monarch Money, you may already have this information at hand — but how long has it been since you stared it in the face?

Round up the numbers and give yourself a minute to process just how much credit card debt you’re going to need to pay off.

Avoid bogging yourself down with negative emotions of guilt or shame. You got into debt to solve a problem, and putting those charges on your credit card may have been the best solution available to you at the time. Now you’re going to get yourself out of debt, which will solve a different problem.

2. Calculate how much you can afford to pay

Let’s say you owe $6,000 in credit card debt — or close to the national average. You probably don’t have enough money to pay it off in full right now, so your next task is to figure out how much you can pay off every month.

This will require the creation of at least two different budgeting strategies — one that’s writing down where your money is currently going and figuring out how far off balance you are, and another to figure out how to balance it. Although your finance or budgeting apps can be helpful in terms of understanding where your money is going and how much you might be spending every month, I recommend doing this kind of budgeting by hand, with good old-fashioned columns of numbers.

The first budget you make should be a reflection of what you’re currently earning and spending, including money you’re saving for retirement. You shouldn’t expect your income and your debt to balance. Instead, treat this budget as a realistic document, and use the past six months of income and expenses to understand just how far off balance your budget currently is. There’s no need to feel ashamed about understanding reality — and the more you know about where your money is going, the more information you’ll have to help you make decisions about what needs to be changed.

This, of course, takes us to our second budget. This is the more complicated column of numbers, and it may take a few days to figure out. Not only will you need to make your income and expenses balance — which could take some rethinking and reprioritizing in terms of where your money is currently going and where you’d like it to go — but you’ll also want to target more of your income toward credit card debt repayment.

At this point, I should rattle off the usual platitudes about canceling subscription services and cutting back on lattes. But if we could really eliminate credit card debt by saying no to Netflix and Starbucks, we’d all be debt-free. You’re probably going to need to think bigger, and you may need to ask yourself some serious, life-changing questions.

The path toward financial freedom often leads toward increasing your income, for example. It also leads to fewer vacations and less money spent on birthdays and holidays. It may even lead toward inventiveness, ingenuity, community and collaboration — and, in some cases, a more authentic sense of satisfaction.

So figure out how much you can put toward your debt every month, and then figure out how much more money you could put toward your debt if you changed some of the numbers in your previous budget.

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3. Pay off one balance at a time

If you’ve read other articles about how to pay off credit card debt, you’re probably already familiar with the snowball method and avalanche method. These two debt repayment techniques, popularized by Dave Ramsey, involve picking one credit card and paying it off in full while making the minimum payment on all your other cards. Once you’ve cleared out one unpaid balance, you start on the next one.

These techniques differ in how you choose the next card to pay off: The snowball method asks you to begin with your smallest outstanding balance, while the avalanche method asks you to begin with the balance accruing the most interest. It does not matter which one you pick, since the math on both methods comes out as a wash. Just pick a card, any card, and start paying it off.

This technique works because — well, it works. You pay off a credit card in full, and then you pay off another credit card in full.

There are emotional benefits to paying off a single outstanding debt, of course, but it works even without the associated feeling of accomplishment. It works because you’re paying off your debt, in full, one debt at a time. It also works because every time you pay off an outstanding balance, you have a little more money to put toward the next outstanding balance.

4. Start living a debt-free life

The last step in paying off your credit card debt is beginning your new debt-free life — which you can start even before you finish paying off your old balances.

How? It’s simple: From this moment on, you aren’t going to go into any new debt. Your old debt is a financial responsibility that you’re taking care of, one balance at a time. But you, right now, are living a debt-free life. This means that you only make purchases you can pay off in cash, regardless of whether you put them on debit or credit. (There are enough advantages to using credit cards instead of debit cards — from building your credit to earning rewards on everyday spending — that I’d recommend keeping your existing credit cards active, as long as you pay off any new balances in full every month.)

This may require you to create yet another budget, and it may require another round of major life changes. You got into debt, after all, because it seemed like the best solution to the problems you were facing at the time. If similar problems occur in the future, you’ll need another way of solving them.

But the kind of person who can pay off their credit card debt is very likely the kind of person who can figure out new solutions to financial problems — so I’ll leave you to work out those answers on your own.

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About the writer

Nicole Dieker is a seasoned freelance writer with a focus on personal finance and personal development. Her expertise has been featured in Yahoo Finance, Newsweek, Bankrate, NBC News, Lifehacker, Penny Hoarder, The Simple Dollar, Vox and other top media brands. Nicole also spent five years as a writer and editor for The Billfold, a personal finance blog focused on honest conversations about money.