4 Ways to Reduce Your Credit Card Debt

Woman using a calculator to go over bills.

Like most things in life, credit cards come with advantages and disadvantages. On the list of positives, credit cards can offer you convenience, consumer protection and sometimes rewards. On the negative side, credit cards may tempt you to overspend, leaving you paying variable high interest rates on your balance, plus possibly late fees and penalties.

If you have credit card debt, you aren’t alone. A recent Bankrate survey revealed that more than one in three Americans have more credit card debt than money saved in an emergency savings account in both 2023 and 2024.

Why is it Important to Pay Off Credit Card Debt?

Getting out of credit card debt—and then paying off your balance each month—may help you enjoy these potential positives:

  • Lower or no interest charges on new purchases
  • Improved credit score
  • More money to build emergency or retirement savings
  • More flexibility in your budget

Check out our 5 Tips to Save Money on Groceries and Household Essentials

How to Reduce Your Credit Card Debt

Are you ready to knock out your credit card debt once and for all? In honor of Credit Education Month, consider these four common strategies for tackling credit card debt:

1. Snowball Method

What it is: Just like a snowball starts small and grows, this strategy focuses on paying off debt starting with the smallest and working toward the largest.

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How it works: For example, let’s say Susan has four credit cards with balances of $1,200, $1,800, $4,200 and $5,500. Using the snowball method, Susan would focus on paying off the $1,200 debt as aggressively as possible, while making minimum payments on the $1,800, $4,200 and $5,500 debts. Once the $1,200 debt is paid off, Susan would “snowball” the money she was paying on the $1,200 debt toward the $1,800 debt. Then again, once the $1,800 debt is paid off, she would “snowball” the money and focus on the $4,200 debt—and so on.

Advantage: Knocking out smaller debts first gives you excitement to keep up the momentum.

2. Avalanche Method

What it is: The debt avalanche method focuses on prioritizing your debt with the highest interest rate first.

How it works: To practice this method, funnel as much money as possible toward your debt with the highest interest rate, and make minimum monthly payments on your lower interest rate debts. When your debt with the highest interest rate is paid off, “avalanche” your repayment funds toward the debt with the second-highest interest rate—and so on.

Advantage: This method helps you save money on interest.

Get these tips on How to Create a Monthly Budget That Works

3. Debt Consolidation With a Personal Loan

What it is: If you have good credit, but overwhelming credit card debt, you may be able to consolidate your debt with a personal loan from a bank, credit union or online lending platform.

How it works: For this method, you would take out a personal loan in the amount you need to pay off all your credit card debt. Then, you would pay off your credit cards, and instead make single monthly payments toward your personal loan instead.

Advantage: Personal loan interest rates are stable and tend to be lower than interest rates on credit cards. Plus, you’ll have a fixed repayment timeline and know the date you’ll become debt-free.

4. Debt Consolidation With a 0% Balance Credit Card

What it is: If you have good credit, you may be able to consolidate your debt with a 0% balance credit card.

How it works: A 0% balance credit card allows you to transfer all your outstanding credit card debt to one account. A balance transfer fee is usually required, and then you’ll have a limited amount of time, oftentimes 21 months, to pay off your balance at 0% interest rate. Once the introductory period is over, you’ll begin paying the standard variable interest rate.

Advantage: This can help you save money if you’re able to pay most or all your balance within the introductory period. 

Want more? Check out our blog, What is Your Net Worth? How to Find Out

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