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At Solvable, we care about your financial well-being and are here to help. Our research, articles and ratings, and assessments are based on strict editorial integrity. Our company gets compensated by partners who appear on our website. Here is how we get compensated.
At Solvable, we care about your financial well-being and are here to help. Our research, articles and ratings, and assessments are based on strict editorial integrity. Our company gets compensated by partners who appear on our website. Here
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If you’re like many Americans, you spend a significant amount of time wondering how you’ll ever be able to pay off your credit card debt. Making the minimum payment and hoping for the best won’t cut it. Here’s what you need to know about tried and true strategies to get rid of those high-interest balances and secure your financial future.
Change Your Perspective
The thought of having $15,000 in credit card debt is overwhelming. Reframe your situation by mentally grouping the debt into smaller chunks: three cards with a $5,000 balance each, for example. If you have multiple cards, list each balance amount, interest rate, and minimum payment. Then, take a look at your budget and determine the amount of money you can put toward your credit card bills each month. If you can’t make at least the monthly payment on each, you’ll need to either cut down spending on other budget items, increase your income with overtime or a second job, or seek help from a credit counseling service.
Choose a Strategy
Now that you’re looking at your credit card debt head-on, it’s time to choose a method of repayment. Refer to the numbers you wrote down above. Let’s say you can dedicate $500 to your credit card debt each month. The minimum payment on each of your cards is $100, which means you have $200 left over. You can opt to put this amount toward either the credit card with the highest interest rate (avalanche method) or the card with the lowest balance (snowball method).
No matter which of the two methods you choose, you’ll be paying $100 to two of your cards and $300 to the third card every month. When the third card is paid off, you’ll be able to pay $100 to one of your remaining cards and $400 to the other. Finally, you’ll be left with one card and paying $500 a month toward the outstanding balance.
From a strictly financial standpoint, it makes the most sense to focus on the card with the highest interest first because it costs you the most over time. However, some people prefer the snowball method because it gives them the psychological win of paying off a small card quickly, which provides the motivation to continue on the right track.
Having a solid plan is the first step to making headway on your credit card debt. Now that you’ve chosen your strategy and are well on your way to becoming debt-free, you can consider opportunities to boost your success by paying down your balances faster. Tricks to try include the following:
Apply for a credit card with a 0% interest rate on balance transfers. Move your highest-rate balance to that card. However, carefully review the terms and conditions, since you may only have a few months to make payments before the interest rate skyrockets. You can also lose the introductory rate if you miss a payment. Keep in mind that you will need a good credit score to qualify for this type of card (at least 700 in most cases). You should also account for balance transfer fees, which are often assessed at 3 to 5% of the transferred amount.
Consolidate your credit card debt with a personal loan. If you’re able to qualify for a low-interest-rate loan from your bank or credit union (typically requiring a credit score of at least 600), you can use it to pay off your high-interest credit cards and then make payments on the loan. Even though your loan payment will be lower than your combined credit card payments, you should continue to dedicate the full amount you budgeted to pay the debt. Look for an online consolidation calculator to see if this route makes sense for you. Interest rates on these loans range from 10 to 20%, which is likely less than your credit card interest. With good credit, you could qualify for a loan at just 5 to 6% interest.
Create a household budget that realistically accounts for all your expenses. If you find you’re overspending in certain areas, you’ll need to cut back. This can keep you from accumulating more debt even after you pay off your existing cards.
Put extra money toward your credit card debt. If you get a raise, roll that amount into your monthly debt payment. The same goes for bonuses, birthday money, tax refunds, and other windfalls that can make a serious dent in your debt.
Stop using your credit cards, but don’t close the accounts. Cut the cards up if you need help to curb your spending. Because the age of your accounts is a factor in your credit score, canceling old accounts will likely lower your score (the exact opposite of your goal). Closing the credit card account will also increase your debt utilization ratio, which is the percentage of available debt that you are currently using. Having a high debt utilization ratio negatively impacts your FICO score.
When You Can’t Pay Your Debt
If you are unable to make even the minimum payments on your credit card debt, it’s important to seek assistance. Non-profit credit counseling organizations can help you explore options to repay, reduce, or eliminate your debt. These strategies could include:
Attempting to negotiate with the credit card company to lower your interest rate or forgive late fees and penalties
Negotiating to settle the account for less than the full amount
Filing for Chapter 7 or Chapter 13 bankruptcy
You will need to gather information about your complete financial picture, including credit card statements, bank account statements, pay stubs, and other documents that will help make the case to your creditors that you are experiencing hardship.
An experienced credit counselor will delve into your financial situation and assist you in reaching a workable solution. When you don’t want to go it alone, contact Solvable for credit card debt relief. We’ll take stock of your bills and match you with well-reviewed companies that can get you on the path to a debt-free future.
Solvable is a for-profit company that helps customers resolve their tax problems, but a free service for consumers. Partners cannot pay us to guarantee favorable editorial reviews or ratings. We do not publish favorable (or unfavorable) editorial reviews or assessments at the direction of an advertiser or partner. We always work to put consumers first and do our best to provide value in meaningful ways, but our reviews are subjective.
How We Make Money
Solvable is compensated by some of the companies seen on our website. Most often, Solvable receives fees when one of our readers clicks, fills out a form, applies for, or receives a financial product from one of our partners. We also earn fees for capturing consumer stories and writing about them, displaying advertising, having our partners sponsor certain parts of the site, and writing content that may be relevant to our partner and their audience. This compensation may impact where products appear on this site, including article pages, comparison listings, the order in which they appear or if they will even appear on a given page, and our matching recommendations. Solvable has not written about, reviewed, or rated all financial products available to consumers.
In addition, we may be compensated in the following ways:
Referrals to consumers who use the online form or locator line that may provide expert answers to questions;
Marketing tax resolution, tax preparation, tax audit help and general tax assistance.
Referrals to services that help consumers with tax resolution, tax preparation, tax audit help and other tax issues.
We do recommend that you shop around and compare services and costs with other companies while performing your own due diligence, especially since people’s experiences with companies can change over time.
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The offers that you are matched up with are from companies or attorneys/law firms that we may receive compensation from. Based on our initial review of such companies or individuals, we feel comfortable introducing them to our readers. We won’t recommend something just because we’re offered payment to endorse or promote it. However, we do recommend that you shop around and compare services and costs with other companies while performing you own due diligence, especially since people’s experiences with companies can change over time.
We are not attorneys and we don’t provide legal advice. As always, we encourage you to do your homework and check out individuals and companies before you hire them. If you are already working with an attorney, we urge you to ask them your questions. After all, they will be familiar with your situation and the laws in your state.
We hope that you find Solvable helpful in your efforts to get a fresh start.
Personal Loans Advertiser Disclosure
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Personal Loan Providers determine the underwriting criteria necessary for approval. You should review each Provider’s terms and conditions to determine which loan works best for you and your own personal financial situation. All reasonable efforts are made to provide and maintain accurate information. All rates, fees, and terms are presented without guarantee and are subject to change pursuant to each Provider’s or affiliates discretion. There is never a guarantee you will be approved for credit or that upon approval you will qualify for the advertised rates, fees, or terms that were shown.
Be sure to speak with your representative about the actual term and rate you may qualify for based on your credit history and ability to repay the loan. Lenders may charge an origination fee generally around 1% of the amount sought. Be sure to ask up front about all fees, costs and terms associated with each loan product. Loan amounts of $1,000 up to $35,000 may be available through participating lenders or affiliates; however, your state, credit history, credit score, personal financial situation, and lender underwriting criteria can impact the amount, fees, terms and rates offered. In some cases, lenders may require that you have an account with them already and for a prescribed period of time in order to qualify for better rates on their personal loan products. Ask your representative for details.
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Credit Card Providers determine the underwriting criteria necessary for approval. You should review each Provider’s terms and conditions to determine which card works for you and your personal financial situation. Information is provided by the Credit Card Providers and is not a guarantee of approval.
All credit card rates, fees, and terms are presented without guarantee and are subject to change pursuant to each Provider’s discretion. All reasonable efforts are made to provide and maintain accurate information. There is no guarantee you will be approved for credit or that upon approval you will qualify for the advertised rates, fees, or terms shown.
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Business Loan offers that appear on this site are from companies or affiliates from which solvable may receive compensation. This compensation may impact how and where products appear on this site (including for example, the order in which they appear or whether a lender is “featured” on the site). solvable does not include all Business Loan companies or all types of offers available in the marketplace.
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There is no one-size fits all business loan. Rather there are several types that will likely be offered and or discussed with you upon completing your request. Business Funding Partners determine the underwriting criteria necessary for approval, you should review each Partner’s terms and conditions to determine which business funding option works for your business’s financial situation. All reasonable efforts are made to provide and maintain accurate information. All rates, fees, and terms are presented without guarantee and are subject to change pursuant to each Partner’s discretion. There is never a guarantee your business will be approved for credit or that upon approval your business will qualify for the advertised rates, fees, or terms shown. Lender terms and conditions will apply and all products may not be available in all states. Ask your loan representative for details.
Student Loan Refinancing Advertiser Disclosure
Student loan offers that appear on this site are from companies or affiliates from which solvable may receive compensation. This compensation may impact how and where products appear on this site (including for example, the order in which they appear or whether a lender is “featured” on the site). solvable does not include all student loan companies or all types of offers available in the marketplace.
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Potential savings may vary based on the interest rates, balances and remaining repayment term of the loans you are seeking to refinance. Your overall repayment amount may be higher than the loans you are refinancing even if your monthly payments are lower. Variable rate options will fluctuate over the term of your loan with changes in the LIBOR (or other index utilized by the lender) rate, and will vary based on applicable terms and presence of a cosigner. Fixed interest rates may be based on applicable terms and presence of a co-signer. Additional terms and conditions, and rates are subject to change at any time without notice and may not be available in all states or for all types of current student loans. Such changes should only apply to applications taken after the effective date of change. Please note: Due to federal regulations, Lenders are required to provide every potential borrower with disclosure information before they apply for a private student loan. The Lender you select is required to provide you with an Application Disclosure and an Approval Disclosure within the application process before you accept the terms and conditions of your loan. solvable is not a lender or creditor, it does not offer, extend or alter credit terms. Only participating lenders can perform the full application and deliver the required disclosures, please ask your lender about rates, terms, fees, and potential discounts that may be available for each product.
Please Note:
Certain federal and private student loans may not be eligible for consolidation/refinance.
Certain consolidation/refinance plans may result in higher monthly payments or negative consequences (i.e. prepayment penalties).
Consolidation/refinance may lead to other negative results, such as loss of grace periods.
Loans in default generally cannot be consolidated until completion of a repayment trial plan so tell your lender if you are in default and determine relevant options (be wary of those asking for upfront fees as well)
Other options or programs may fit your needs (i.e. personal loan, debt consolidation and/or debt relief). Consult your financial and/or tax advisor prior to making any decisions.
Solvable is not a creditor as it does not offer, extend or alter credit; rather it is an online market lead generator that allows consumers to shop and compare rates, terms and costs associated with financial products such as mortgages, auto loans, personal loans, student loans, etc. solvable does not originate or fund any product it markets; rather it has a network of lenders or Partners/affiliates. You may choose to speak with one or more of these lenders or Partners/affiliates to determine what your actual terms and savings may be. Only a lender can provide you with a formal application for credit, your inquiry form here is merely an expression of interest and/or intent to obtain credit or assistance. You must discuss your actual credit situation and fill out the lender’s required documents prior to obtaining an extension of credit. Network lenders may not have the best or the lowest rates so you are encouraged to continue to shop and compare additional lenders, credit unions, local financial institutions, etc. to ensure you are truly getting your best deal for your situation.
You should contact your tax professional or other financial advisor to determine if you can actually realize savings by refinancing when it can extend the life of your current loan. You should ask the lender about all terms, rates, fees and costs associated with each product and if you will realize a net tangible benefit from the same. All initial estimated savings is done by trying to calculate what your rate may be; however, solvable does not have that information and cannot guarantee potential savings or that lenders will approve you for such product that would warrant those savings. Rates are not guaranteed and change daily. Lenders/Brokers/Dealers/Partners that perform the actual underwriting will have to determine if you meet their underwriting criteria which is unknown to solvable at the time of matching/offer/quote delivery. All amounts are estimates and examples only and do not represent an actual offer.
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