How to Pay Off $15,000 in Credit Card Debt

What would you do if your credit card bill arrived this month with a balance owed of $15,000?

That’s a popular question because it’s one a lot of American households face every year.

The average adult who doesn’t pay off the balance on credit cards each month, owes $7,527 on his credit cards. If there are two adults at home, that’s a little more than $15,000. And if there are children in that house, there’s usually an urgency to do something about it … NOW!

So, if you’re in a household with two adults who aren’t paying off the balance on their credit cards every month, how do you erase a $15,000 debt?

You could try the minimum monthly payment route, but it’s a financial disaster. If you make the minimum payment of 3% a month on $15,000 worth of debt, you face 227 months (almost 19 years!) of payments, starting at $450 a month.

By the time you finish, you will have paid almost as much in interest ($12,978) as you did in principal. And that’s if you don’t use any other credit cards for those 19 years!

You probably don’t want that, or shouldn’t want that.

There are more desirable choices that range from self-help options like better budgeting or a DIY (do-it-yourself) payment plan to a debt management program (DMP) run by professionals. If those don’t appeal to you, there are debt consolidation loans or if things are really desperate, debt settlement.

Find out if Debt Management can help

Any of the choices require two things that have been in short supply to this point: discipline and money. You’re going to need a little of both to make your credit card debt go away. Here are the five least painless ways to make that happen.

1. Food for Thought – Get on a Budget!

The most efficient way to pay down credit card debt is with a disciplined makeover of your monthly budget.

What’s that? You say you don’t have a budget? Neither does 60% of American households and that’s something everyone should change. Budgets are to financial health what exercise is to personal health. It’s possible to get by without it, but your chances of succeeding increase dramatically if you go with it.

Budgets allow you to pinpoint areas where you could trim some fat and create the money needed to pay off those credit cards. Here is a perfect example.

Every household has to eat and that’s why food is the third-largest item in a monthly budget behind housing and transportation. Conveniently, it’s also the easiest number to manipulate.

The U.S. Department of Agriculture (USDA) said that in 2018, Americans spent around $7,200 a year on food. Not surprisingly, we spent more dough eating out (53.2%) than eating in (46.8%). Fortunately, there are easy savings in both places.

If you’re going out to eat – don’t! You can make the same thing at home for about one-third of what you pay for it at a restaurant. So, if your family of four has a meal at a restaurant that costs $40 ($10 per person), you could have done the same thing at home for about $13.

That’s a $27 savings per meal. If you eat out 3-4 times a week (getting pizza delivered is considered eating out), we’re talking a savings of about $400 a month. Even if you cut back to eating out 2-3 times a week, you’ll save close to $300 a month.

And speaking of home, the USDA says you can chop another 25% off your food budget by purchasing generic or store brands over national brands. For a family of four that spends about $1,000 a month on groceries, that’s a savings of another $250.

So, by taking a knife to your food budget, it’s reasonable to think you could find anywhere from $200 to as much as $500 a month for use on credit card debt. Granted, that’s optimistic, but it’s also only one part of your budget. Scrape away things like cable TV, data-driven cell phone plans, weekend clothes shopping, and before you know it, you’ve got way more to throw at the credit card debt than a minimum payment.

But first, you got to get on a budget!

2. Debt Management Program

If you make enough money to handle your expenses (a budget would tell you that), but you let things slide a little too often and fall behind 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 every day 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 and she gave them a call.

Debt management programs offer help on budgeting, reducing the interest rate on credit cards and arriving at an affordable monthly payment that 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 payment plan is a great way to prove it. There are two popular DIY payment plans: avalanche method and snowball method.

The avalanche method asks you to line up your credit card bills in the order of interest rate payments with the highest interest rate payment first and lowest one last.

Make the minimum payment on every card each month so you don’t incur late payment penalties, but 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 from a different angle. It asks that 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 considerably 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’re $15,000 behind 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-end interest rate on a loan.

Rates on consolidation loans vary by lender, but in April of 2019, 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’s probably a wash between that and what you’re paying already on the credit cards.

It’s worth noting that if you own a home, taking out a home equity loan for debt consolidation is valuable. 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 escaping 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. Debt Settlement

This is our last option for solving the problem of $15,000 of credit card debt for a good reason: It can cost you more than it will ever 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. And yes, that does happen, but there are so many outside factors involved that the final amount you pay, seldom results in more than a 20%-25% savings.

And a terrible impact you credit!

Here are some of the issues you must deal with:

  • There is no law that says they 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 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 it 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 go 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.

And you should immediately go back to Step 1 and restart your financial future by putting together a budget!


Kiersz, A. (2018, September 18) How much the average American millennial, Gen Xer, and baby boomer spends each year eating out. Retrieved from

Amadeo, K. (2019 March 19) Average U.S. Credit Card Debt Statistics. Retrieved from

Frankel, M. (2018, May 8) How does the average American spend their paycheck? Retrieved from

USDA (2018, November 29) Food Prices and Spending. Retrieved from

USDA (2018, October 24) U.S. Food Away From Home Spending Continued to Outpace Food at Home Spending in 2017. Retrieved from

Value Penguin (2018, March 9) Average Debt Consolidation Loan Interest Rates for 2019: By Credit Score and Loan Term. Retrieved from