14 Ways on How to Reduce Credit Card Debt

Man slashing debt with a sword - cutting debtCredit card debt is such a serious problem in America that millions of consumers stumble blindly from month-to-month wondering if they’ll ever find a way out.

According to the Federal Reserve, revolving credit-card debt hit $1.023-trillion at the start of 2018, breaking the record set a decade earlier, when the housing and credit bubbles burst to create the Great Recession.

The Consumer Financial Protection Bureau said American households carrying a credit-card balance owe an average of $16,048.

Meanwhile, people keep applying for new cards — at a rate of 50% growth since 2010.

Those numbers are shocking, sobering, intimidating and a good reason to find simple, practical ways to reduce credit card debt.

You don’t need to be flogged by government statistics. You need answers.

What can you gain by eliminating credit-card debt?

Here’s a quick checklist of the positives:

  • Your credit score will improve (vitally important for home and car purchases)
  • You will have more money for spending and saving, particularly for your retirement
  • You will reduce the stress in your marriage or relationships
  • You will gain a better appreciation for what you are spending and possibly eliminate needless purchases.

The benefits are obvious, so let’s have a look at 14 of the best ways to reduce your credit-card debt:

1. Pay Your Bills on Time

The Golden Rule of credit card ownership: Make on-time payments every single month! Preferably on-time payments that reduce the balance to zero every month.

Nothing impacts your credit score or your financial health more positively than making consistent monthly payments on all accounts. If you skip a payment or are consistently late, it’s a red flag. Don’t let it happen.

Even if you can’t settle the entire balance, you MUST pay your credit card bills on time. That allows you to build a nice credit history, while positioning yourself for lower interest rates in the future. If you miss the payment deadlines, you’ll be saddled with late fees, which will run up the debt and hurt your credit score.

2. Live Within Your Means

If we’re being honest, this is the real reason why many of us slip into deep credit card debt in the first place. We purchase things we can’t afford. Many times, we’re buying things we don’t need. The eagerness to “Keep up with the Joneses” never goes out of style in America, but it continues to create needless financial issues.

If you spend less than you make, you will create the ability to save. And if there’s an unexpected expense — they happen to everyone — it will be more of an inconvenience than a crisis.

3. Pay off Higher-Interest Cards First

This is a math equation that should be easily understood.

If you have two credit cards — one with an interest rate of 18% and one with an interest rate of 24% — you should always, always, always pay down first on the card with the 24% interest rate.

Some people think that paying the same amount to each one is the “fair” way to do things, but it is mathematically a huge loss for you, the consumer.

By paying off the card with 24% interest, you are making 6% on your money, as long as you pay at least the minimum on the 18% interest card.

3 Easy Tricks to Get Out of Credit Card Debt

Here are a few tips to help you pay off credit card debt brought to you by Money Minute

4. Make More Than the Minimum Payment

If you have too much debt, it’s easy to fall into the trap of making just the minimum payment on your credit cards. Don’t do it!

It could take you decades to escape from that hole. Really. Decades.

Generally, the minimum payment is approximately 2% of the principal owed. Let’s say your balance is $2,000. That would mean a $40 minimum payment. Even if your interest rate is 8% (that’s on the extremely low side for anyone with credit issues) and you don’t put any more purchases on your credit card (unlikely), guess how long it will take to pay off that $2,000 balance?

Would you believe … more than 30 years? And the total payoff is an astounding $7,000.

That means paying nearly $5,000 in interest.

The minimum payment is mostly covering just the interest charged on the loan. The outstanding principal still remains and will generate more interest in the next payment.

Using our example, it’s like taking out a $2,000 loan that ultimately costs you $7,000 to pay off.

Who thinks that’s a good deal? That’s right … no one. And that’s why you should avoid the trap of making just the minimum payment on your credit cards.

5. Avoid Taking on More Credit

One thing is certain: If you have a lot of credit card debt, you don’t need more. Ironically, however, it makes you an extremely popular person with all the credit-card companies. Your mailbox probably is full of slick-looking offers for new cards and loans every week.

Don’t the creditors know you’ve already had problems paying off your other cards?

Of course, they know that. It’s why you’re being courted so heavily. If you’re offered more credit, you’re bound to accept, right? That means more interest and fees to pad their pockets.

Remember, deep-debt consumers are wonderful prospective customers for other credit-card companies. When you get mailers, you should cut them up and throw them in the garbage. Better yet, don’t even open the envelopes.

6. Consider Consolidating Credit Card Payments

 If your problem is too many credit cards and too many payments — the average American credit card holder owns four cards – it might be time for debt consolidation and some free advice from a nonprofit credit counselor.

Credit counselors will help you design a budget that you can live on and then suggest whether debt management programs or debt consolidation loans will improve your chances of eliminating credit card debt.

Debt management programs are not loans. The nonprofit agencies that recommend them work with credit card companies to reduce the interest rate you pay on your debt and set up an affordable monthly payment schedule based on your budget. You make one payment with one deadline instead of multiple payments with multiple deadlines.

Debt consolidation loans come from banks, credit unions or online lenders. They may offer a better interest rate than what you’re paying on your credit card debt and could reduce the monthly payment you make. 

7. Balance Transfers? Yes, If You’re Disciplined

If you’re in credit-card trouble, it might seem enticing to transfer your hefty balance to a new credit card that offers 0% interest during an introductory period.

If you have enough discipline to pay off your credit card debt during the introductory period (usually 12-18 months), it very definitely is a good idea.

But ask yourself this question and give an honest answer: Am I disciplined enough to make payments – and not add more charges – for 12-18 months?

There are other considerations such as the balance transfer fee (usually around 3% of the balance); and the interest rate you will pay when the introductory period ends could be significantly higher than what you were paying on your current card.

If you weren’t able to pay off the balance in the first place, you might be adding to your troubles, not subtracting from them with a 0% balance transfer card. 

8. Request a Lower Interest Rate

Wait, can this actually happen? It can, but not enough people even give this a try.

Obviously, lower interest rates make it easier to pay down debt because a smaller portion of each monthly payment gets eaten up by accrued interest charges and the principal is addressed much faster.

Negotiations aren’t for everyone. In fact, they can be so intimidating that some consumers don’t want that.

Here are some tips when you make that all-important phone call, which could help you to lower your credit-card debt:

  • Know the current interest rate on each of your credit cards. It’s helpful to know the national average rates for those cards (it might be close to 13% and cards rarely dip below 10%, so have a realistic negotiation or your efforts might be dismissed). Go into the call knowing the rate you’d like to achieve through negotiation.
  • It is a negotiation, so you might have to live with some give-and-take. Even if you ultimately reduce the rate a few percentage points, that’s still better than nothing.
  • Have some beneficial facts at your fingertips. Tell them how long you have been a customer for each account. Report how long you’ve gone without missing a payment. If your credit score has improved since you opened the account, definitely work that into the conversation.
  • Some of your goals should be lower monthly payments, a limited-time adjusted payment schedule and perhaps the removal of penalties and fees.
  • Try, try again. If the representative won’t work with you initially, you can try another day or perhaps wait a few months when you’ve reduced the debt and boosted your credit score. Persistence often pays off.

9. Avoid the Add on Problems

Credit-card companies, like any business, are trying to make a profit. In addition to charging purchases that you probably don’t need, you could get into deeper trouble by agreeing to the many “add-on’’ services offered by credit card companies.

If you are offered credit-card registration services, credit card insurance or credit-card loss/theft protection … run! These all cost additional money. Most of them are not needed by the typical consumer. It’s just an easy way for credit card companies to bump up the profits.

10. Read the Fine Print on Agreement

All cards have a credit agreement and fittingly, it’s printed in extremely small type and doesn’t exactly look like light reading.

Want some real-life examples of terms included on credit agreements?

  • A penalty of 32% for making three late payments within six months
  • If you have two late payments in a year, the interest rate increases to 32.6%
  • Penalties for payments due on weekends or holidays (yes, it might be impossible to process payments on those days)
  • A $15 inactivity fee for not using an account within a six-month period and it could be charged every six months
  • A cancellation penalty interest rate of 24%, which is assessed on the unpaid balance when the account is cancelled
  • A cash advance fee of 21% for the first usage, and then it jumps to 24% for every other usage
  • When you get a new credit card — if you must — be sure to read the entire credit agreement. Bring a magnifying glass if necessary. It’s best to know when the fees are triggered and the entire rate structure of the account.

11. What to Ask Credit Card Companies

If you don’t understand the language in your credit card agreement – or your eyes just aren’t good enough to make out print that small – here are some questions to ask before signing:

  • If the account has an annual fee, what is it? When is it billed?
  • What is the billing date/statement date/closing date?
  • What is the due date? Is there a deadline on that due date, such as 2 p.m.?
  • Is there a grace period?
  • How is the minimum balance calculated? What percentage of the principal is it? (It’s usually 2%)
  • What is the policy for merchandise returns and errors?
  • Under what circumstances can fees be assessed or rates increased?


Even those enticing-looking 0% credit-card offers should wind up in the wastebasket.

12. Review Monthly Bill and Credit Report

Make sure that payments are posting to your accounts each billing cycle. It’s your responsibility to make sure the records are up to date and accurate.

You also should order your free credit report at least once a year and review it carefully. Errors can be made that will affect your credit score and thus, the interest rate on your credit card. You should be on top of that.

Credit reports are a reflection of your ability to repay debts. Some studies have shown that more than half of all credit reports have errors and with three different bureaus supplying your reports, the chances for mistakes are very high.

13. Don’t Close Cards

When you’ve paid off one credit card, it might seem like a good idea to close that card entirely. It is not. Your credit score is partly based on your credit utilization ratio and have a card open – but no using it – really helps your credit utilization ratio.

Here’s how: that ratio is calculated based on the amount of credit you are using vs. the total credit available.

When a card is closed, there is less credit available in your name. That causes your debt utilization ratio to increase and that’s a negative for your credit score.

It’s also important to maintain a long credit history. Keeping your card open will improve that part of your score, too.

14. Rewards Points

With a rewards credit card, you earn points or cash back for each dollar you spend. The points can be used to redeem rewards for gas, travel, gift cards or other options.

It’s an incentive to use a credit card, which might not seem like a good route for anyone looking to reduce their debt, but the benefit is saving money. Rewards programs can help consumers save for a vacation, get cash back for regular spending or purchase gift cards for the holiday season.

Rewards cards are typically available for consumers with good to excellent credit (scores of 680 or higher). They could have higher APRs or annual fees, so be careful. You don’t want the drawbacks to outweigh the benefits.

You shouldn’t consider a rewards cards until you are able to pay off your balance every month. Consider them a tool to utilize when your debt has been significantly reduced or eliminated.


NA, (2018, 13 February), How To Reduce Credit Card Debt In 5 Easy Steps. Retrieved from: https://www.debt.com/edu/reduce-credit-card-debt/

Peterson, E., (2018), 8 Steps To Reducing Credit Card Debt. Retrieved from: https://www.creditcards.com/credit-card-news/help/8-steps-cut-credit-card-debt-6000.php


DeNicola, L., (2017, 21 September), A Guide To Eliminating Credit Card Debt. Retrieved from: https://creditcards.usnews.com/articles/a-guide-to-eliminating-credit-card-debt

Taylor, P., (2018, 20 April), 17 Winning Tips And Tricks To Legally Eliminate Credit Card Debt (For Good!). Retrieved from: https://ptmoney.com/legally-eliminate-credit-card-debt/

Cannon, A., (2017, 18 March), The Fastest Method To Eliminate Credit Card Debt. Retrieved from: http://www.wisebread.com/the-fastest-method-to-eliminate-credit-card-debt