If you’re wondering how to pay off $15,000 in credit card debt, you can comfort yourself with the fact that you’re not alone. More than 40% of U.S. households carry over credit card debt from one month to the next and the average balance is $7,938.
Though card debt dropped in 2020 during the COVID-19 pandemic — Americans paid down credit card debt a total $138 billion the first two quarters of 2020 — financial experts expect that to pick back up once restaurants and other events open up. Whether you owe $15,000 in credit card debt, $7,938, or something in between, the issue is that you have a big bill that’s hard to get rid of. And for every month that balance doesn’t get lower, it costs you more money.
If there is more than one credit card holder in your household, it’s easy, even if you’re “average,” for the amount owed to get to $15,000 or higher. How to pay off $15,000 in credit card debt may seem impossible. The good news is, it’s not. There are many ways to chip away. Below you’ll find seven time-honored options, ranging from self-help options as simple as better budgeting or a do-it-yourself payment plan, to getting professional assistance from a debt management program (DMP). In the middle are debt consolidation loans, balance transfer cards, and if things are really desperate, debt settlement.
The hardest way, or impossible way, to pay off $15,000 in credit card debt, or any amount, is by only making minimum payments every month. A minimum payment of 3% a month on $15,000 worth of debt means 227 months (almost 19 years) of payments, starting at $450 a month.
By the time you’ve paid off the $15,000, you’ll also have paid almost as much in interest ($12,978 if you’re paying the average interest rate of 14.96%) as you did in principal. And that’s if you don’t use any other credit cards for those 19 years.
Any of the seven options you choose will require hard work and keeping your eye on the long-term goal of making your credit card debt go away.
1. Create a Budget
The most efficient way to pay down credit card debt is by giving serious attention to a monthly budget.
While studies show that 70% or more Americans think it’s important to budget, you may be one of the 30-40% who doesn’t do it. The key to building a financial foundation, and paying off that credit card debt, is understanding and controlling your finances with a budget.
Budgets allow you to pinpoint areas where you could trim some fat and create the money needed to pay off that debt. Don’t overthink it and feel overwhelmed, Creating a budget doesn’t have to be complicated. It’s simply a plan for looking at how much money you have coming in and deciding where it will go.
One good guide for budgeting is the 50/30/20 budget plan – 50% of your income goes to what you must pay and need, 30% is for things you want, and 20% goes to savings and debt payment.
But this isn’t necessarily a magic formula. If you don’t have a decent income, however, those necessities may take up a much bigger chunk of your budget.
Your bank’s website or app may also have a budget feature that shows where your money goes and helps you target money for certain items. It’s worth checking with your bank to see if it does.
There are some vital things anyone who’s budgeting can do, and one of them is to look at what you pay for food. While food is the third-largest item in the average American’s monthly budget, behind housing and transportation, it’s also the easiest area to cut spending.
Americans spent between $4,109 and $13,348, depending on their income, on food in 2018, the last year for which numbers are available from the U.S. Department of Agriculture. Those who are in the lowest income range may have only spent $4,109 on food, but it represents 35.1% of their income. Those spending $13,348, on average, spent 8.2% of their income on food.
But think about it – does someone who makes a huge amount of money need more than three times the amount of food as someone scraping by? Of course not. The more money someone makes, the more they splurge on food. Americans in 2019 spent 54.8% of their food money eating out, and 43.2% on the food they spent at home.
With that in mind, take a look at your income and then go through your monthly food expenses – it’s easy if you use a card, just check your statement. If you pay cash, keep the receipts for a month. Then add up how much you spend on eating out. Even though food spending went down during the COVID-19 pandemic, you likely will have drive-thru coffees and take-out pizza on there.
You can buy a pound of good coffee for what two coffees at Starbucks, or even Dunkin’s, costs. That pound of coffee will last you a week or more.
The coffee is just one example, but in general you can make something at home for a fraction of what you pay for it at a restaurant. So, if your family of four has a meal at a restaurant that costs $80 ($20 per person), you could likely could have made something similar at home for a third of what that cost, or around $26. If you eat out a few times a week, or get food delivered, the savings really begins to add up. Even if you cut back by half, you’ll save money.
And, to underscore it, a study during the COVID-19 pandemic found that 78% of those surveyed said they saved money by not going out to eat during the pandemic, with an average savings of $245 a month.
The USDA also says that consumers can reduce their food budget by 25% by buying generic or store brands.
Decide how much you really need to spend on food and where you can cut corners, and you’ve made solid budgeting decision.
Food, obviously, isn’t the only place to cut expenses. But it’s a big example of how a budget and looking at what you spend makes a difference. Check out your spending on subscriptions, streaming services, cable and other things you could do differently, and cheaper.
There are a variety of apps and other resources that can help, and there are a variety of online budget tools and templates to guide you.
2. Debt Management Program
If you make enough money to handle your expenses, but you let things slide and you’ve fallen behind financially because of it, a debt management program might be the easiest way to get back on track.
It was for Joanie Asmus, who paid off $18,000 in credit card debt with a DMP.
She was using credit cards for everyday expenses until she maxed out seven of them. She thought about bankruptcy, but then a friend told her about InCharge Debt Solutions debt management program. She gave them a call and was on her way to getting rid of that credit card debt.
Debt management programs offer help on budgeting, reducing the interest rate on credit cards and arriving at monthly payment that is affordable based on your income. The program eliminates debt in 3-5 years. Credit scores are no factor in qualifying for a DMP. Asmus took advantage of all of that.
The credit counselors helped her draw up a budget, got the interest rate on her cards reduced from the 25%-28% she was paying, to as low as 2% and the result was an affordable monthly payment that eliminated the debt in just under five years.
“There is no way I could have done that on my own,” Asmus said. “It would have taken me 30 years to pay that off without (InCharge’s) help.”
3. DIY (Do It Yourself) Payment Plans
If you are confident you are ready to turn the corner on financial responsibility, a DIY debt management plan is a great way to prove it. There are two popular DIY payment methods: avalanche method and snowball method.
With the avalanche method, you line up your credit card bills in the order of interest rate payments, with the highest interest rate payment at the top and lowest at the bottom.
Make the minimum payment on every card each month so you don’t incur late payment penalties, and put any extra money you have available on the one with the highest interest rate. When that one is paid off, add the minimum payment and extra money you were using and apply them to the second card and so on until all cards are paid off.
The snowball method is similar, but you line up your cards by amount owed, with the least amount coming first and the highest amount last.
Make the minimum payment on every card, every month, but throw whatever extra money you have at the one with the lowest balance. When that one is paid off, take the money you were applying to it, add it to the minimum you were paying on the second card and pay it off. Keep going until all cards are paid.
The avalanche method is a money saver. You’re paying off the cards with the highest interest rate so in the end, it’s not going to cost you as much. The snowball method is a confidence builder. You pay off cards quicker and the momentum you get from that success can propel you to finish things off quickly.
DIY’s are tempting, if for no other reason than you are challenging yourself to succeed at making steady, on-time, monthly payments. Both approaches work, provided you have the discipline and commitment to make every payment, every month.
4. Debt Consolidation Loan
This is the traditional way to handle credit card debt and for a good reason: If you qualify for a debt consolidation loan, you should be paying a lot less interest that you were on your credit cards.
Key phrase there: If you qualify.
Unlike debt management plans, consolidation loan rates use credit scores to qualify candidates and if you own $15,000 on your credit cards, your credit score is probably taking a beating. The minimum credit score to qualify for most major lenders is 660 or above, and that’s if you’re willing to accept the high interest rate that will come with the loan.
Rates on consolidation loans vary by lender, but in September of 2020, you could get a loan at the low end for about 6% with a credit score higher than 720. If your score was between 660 and 720, you probably would pay 7% on the low end and as much as 25% at the high end.
If you credit score is below 660, the rates jump to 16% at the low end and 36% at the high end. That effectively means it would be a wash between the loan and what you’re already paying on the credit cards.
If you own a home, taking out a home equity loan for debt consolidation is another option. Your house serves as the collateral that keeps your loan rate down, especially if your credit score is not what you want it to be.
So yes, a debt consolidation loan is a good route to when you’re looking at how to pay off $15,000 in credit card debt, but only if you meet the qualifications: good credit score or equity in your home. If not, you are essentially adding to your problems, not solving them.
5. Consider a Balance Transfer
Another option is a credit card balance transfer, which if you qualify, can help you pay debt faster with a 0% or low annual percentage rate (APR).
The key phrase once again is: If you qualify. You’ll need a good credit score and payment history to make this happen.
The way a balance transfer credit card works is that you transfer the credit card debt from the cards you have to a new card that has 0% or very low interest, which makes it easier to whittle down the debt without paying interest during the introductory period. Every dollar goes toward reducing the balance — and not spinning your wheels with large interest — so you get out of debt quicker.
The catch is, you have to pay off the balance during the 12-18 month introductory period or face interest rates of 18%-24%. Paying off the balance may be tough if you owe $15,000 in credit card debt, or even half of that.
Even with a balance transfer fee of 3%-5% on every balance transferred to the new card, it can still be a good way to pay off that $15,000 debt and boost your credit score at the same time.
The credit limit may not be high enough for all your credit card debt, so if you have more than one card, transfer the balances with the highest interest rates.
The positives to transferring balances to a lower-interest card are that you’ll have one monthly payment with a lower interest rate.
The negatives are the fees, which are generally 3%-5% of your balance and they’re the cost to make the transfer happen. They might be worth it considering the long-term advantage of interest savings, but do the math and see if it makes sense for you.
The 0% introductory APR offer will eventually end. And if you haven’t paid down the majority (or all) of your debt, you’re back in the same boat you were in before.
With a 0% (or low) interest rate, new purchases can also be really tempting. If you don’t have a good payback plan and are prone to purchasing the newest, shiniest item, you could be putting yourself in an even more vulnerable position.
6. Debt Settlement
This is our last option for solving the problem of $15,000 in credit card debt for a good reason: It can cost you more than it will save you.
Debt settlement is a hope that your card companies, or the debt collection agencies that own your account, will accept less than what is owed. It does happen, but there are so many outside factors involved that the final amount you pay, it seldom results in more than a 20%-25% savings.
And it has a terrible impact you credit.
Here are some of the issues you must deal with:
There is no law that says lenders have to accept or even negotiate a settlement with you. Some do. Some don’t.
Card companies don’t just open the door to anyone who wants to settle a debt for less than what is owed. You often have to show there is a reasonable explanation for your problems – divorce, medical emergency, job loss – to get them to listen to a settlement offer.
If they do accept a settlement offer, it comes in the form of a lump-sum payment, which would have to be at least 50% (probably more) of the $15,000 you owe. In this case, we’re talking $7,500 in cash. If you had that kind of money sitting around, it would make more sense to use it to chip away at the debt.
Then there is the matter of what a debt settlement does to your credit report. There will be a notation on the report for the next seven years that says the debt was settled for less than what was owed. If you’re trying to rent a place to live, get your power turned on or put in an application for a job, that could come into play.
Finally, there is the damage that does to your credit score. FICO, the credit scoring service used by 90% of businesses, estimates you will lose between 50-150 points on your score. The higher your score, the more you will lose. If you apply for a home loan or car loan, you will pay dearly for low score in the form of high interest rates.
On the other hand, if they do accept your offer for $7,500 or $10,000 or whatever sum is agreeable, the problem is solved.
Lifestyle Changes to Pay Off Credit Card Debt
Besides creating a budget, making good financial decisions when tackling debt can help you manage and pay off your credit card debt faster, no matter which option you choose.
The budget, and cutting expenses to help meet it, are important ways to begin to manage credit card debt. Making some lifestyle changes is the next big step. And, like budgeting and cutting expenses, it can be tough to do, because it’s all up to you.
Lifestyle changes can be anything from eating out less, which we already covered, to getting a roommate to help cover the rent, getting rid of your car if you have reliable public transportation, or even moving to a cheaper city or state. Go to your local library to borrow books and rent movies, instead of buying new and paying for streaming services. Turn off the air conditioning or turn down the heat.
Everyone’s life is different, but look at things you do that cost money that you could do differently. Think outside of the box. Lifestyle changes often mean getting out of your comfort zone, but once you create new habits you may find more comfort in the relief of chipping away at that $15,000 credit card balance that never seemed to get smaller.
There are some things that are good options for almost anyone:
Set Financial Goals
Decide, with your budget a guide, what benchmarks you want to have as you pay down your credit card debt. Set financial goals. Make a chart or use a spreadsheet – find some way to track your progress so you can see the debt disappear.
Having a visual, keeping track and marking milestones help keep you stay focused on what your goal is. You know what the goal is – paying down that $15,000 credit card balance.
Also keep in mind that your goals should be realistic. Apply a SMART-goal strategy – make sure that they are Specific, Measurable, Achievable, Relevant and Timely.
Stop Using Your Credit Card
It may seem obvious, but still, it can be very hard. Not only is it a tough habit to break, but if you’re putting money toward paying it down, you may not have money to do some of the things you used to do when you were piling up $15,000 in credit card debt.
Cut the card up, give it to someone who will hold it for you (and not use it) or try a time-honored method – put it in a large container of water and freeze it. If you’re tempted to thaw it out, spend that time as the ice melts thinking about the $15,000 in credit card debt you owe and how desperately you want to get rid of it.
This is where your budget and expense-cutting become your biggest tools. If you’ve done it right, you’ll still be able to eat, put gas in your car and even maybe treat yourself to a coffee, all without using credit.
Try a No Spending Challenge
Challenge yourself to only buy the things you need and put every penny you save toward paying off that mountain of debt.
If total austerity won’t work for you, have some fun with it. Give yourself a time limit, like a month (anything shorter will have limited effect on your budget). Or pick one indulgence you know you spend a lot on and go a month without it. All of what you save should go toward the debt-paydown program.
Set a goal, and once the balance gets down to a certain level, indulge in something you’ve given up.
You may find once you’ve challenged yourself often enough, not spending becomes as much of a habit as spending was.
Get a Second Job to Earn Additional Income
Finding a second job is a good way to generate some income to put toward paying down the $15,000 credit card debt.
There are many ways to make extra money, particularly in today’s digital app-based world. Jobs driving for Uber or Lyft, shopping or driving for Instacart, and other delivery and shopping services can be found almost anywhere, even in more rural areas. Keep in mind that most of these jobs require a smartphone, a car and a clean driving record.
There are multiple websites that list freelance and part-time jobs – google “freelance jobs” and you’re off to the races.
Your local newspaper or that free weekly that’s loaded with ads that comes in the mail also list local jobs, particularly things like babysitting, pet-sitting, dog-walking and, yes, delivering newspapers. It’s also a good place to advertise if you want to do those type of things but don’t want to be beholden to an app.
Whatever you do, be sure you have the time and energy to do it, and target whatever money you make to paying down your credit card debt.
Pay Your Debts When You Get Paid
Pay your bills, especially the credit cards, on payday, leaving enough money in your bank account for your living needs until the next payday. That way, the bills are paid and you don’t have the opportunity to spend the money on something else.
Automatic withdrawals help tremendously with this. Set up automatic withdrawals for as many of your bills as you can, but particularly for the credit card bills, and make sure you’re making the paymentt for enough that you’re paying extra, not the minimum.
No, couponing these days is not what your grandma did – sitting at the kitchen table with a scissors, clipping them out of newspapers. “Couponing” is a whole new world, but, like Grandma, you can still save a lot of money. That’s money you can apply toward your credit card debt.
There are a variety of coupon services available online – Ibotta for groceries, Groupon for restaurants, SnipSnap, RetailMeNot and more. If you google “online coupons,” you can find what you want and either get digital coupons or ones you can clip out. There are also online services like Rakuten (it used to be called Ebates).Sign in and shop at your favorite stores through the website and get small amounts of cash back. It costs you nothing. Just be sure you’re shopping for things you need to buy.
Your local grocery story may also have a loyalty or rewards program with an app that loads with coupons you can pick and choose from, as well as deals, like a percentage off if you buy store brands.
And yes, there are still coupons to clip in your local newspaper, if you really want to do that.
Consider Professional Debt Relief Help
It’s easy to feel overwhelmed if you need to pay down $15,000 in credit card debt that never seems to decrease. If you feel that way, it may be time to consider professional help to manage your credit card debt.
You can find nonprofit creditcounseling agencies at the National Foundation for Credit Counseling. Agencies listed there, like InCharge Debt Solutions, are there to support your effort to get out of debt.
Besides helping you create a budget and discuss how to make good financial decisions when tackling debt, a professional debt counselor can help you manage and pay off you credit card debt faster.
Agencies have agreements with major card companies to reduce rates for those enrolled in their program. The counselor will offer you the lower rate, and you can decide if it works for you. You would make one monthly payment to the professional counseling agency, and the agency disburses the money to each credit card company in agreed upon amounts.
Nonprofit debt management helps you set affordable monthly debt payment goals based on your current income and expenses. Counselors will work with you to create a monthly budget that includes the debt management payment.
Dealing with an affordable once-a-month payment will have a positive long-term effect on your credit score, because your payments will be on time and your debt will be paid down.
This comes with a small monthly fee, but the reduced interest rate should more than make up the difference and, in 3-5 years, the $15,000 credit card debt will be gone.
In his 40-plus-year newspaper career, George Morris has written about just about everything -- Super Bowls, evangelists, World War II veterans and ordinary people with extraordinary tales. His work has received multiple honors from the Society of Professional Journalists, the Louisiana-Mississippi Associated Press and the Louisiana Press Association. He avoids debt when he can and pays it off quickly when he can't, and he's only too happy to suggest how you might do the same.
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