How to Get Out Of Credit Card Debt

As years passed and debt mounted, I realized my odds of marrying a rich baroness were slightly less than winning the lottery. Sadly, it was time to get serious about digging out of debt.

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Using a credit card is sort of like going down one of those tall slides.

It’s fun. But then at the end the ride ends and the climb back up is long and arduous.

The climb is the part the banks and card companies do not tell you much about when they send the fancy ads with the envelopes that offer free helicopters or an island in the Caribbean for signing up for their credit cards. It’s fun to buy the devices and TVs and clothes with plastic, but the fun ends when the bills come due and your debt has piled up and the interest is at or near 20% and it’s all you can do to stay even with what you owe.

Working out of credit card debt is a painful, difficult process. And it’s one that many in the U.S. understand:

  • 2020 began with Americans owing more than $1 trillion in credit card debt
  • More than 189 million American have credit cards
  • The average U.S. household owes $8,509 in credit card debt
  • The average interest rate on that debt is 14.4%
  • The average American spends $753.80 per year on credit card interest

The last number is meaningful. The minimum wage nationally is $7.25 per hour (29 states pay more), so the worker making minimum wage uses 104 hours of work to pay only interest. That means that the first 2.6 weeks of a minimum wage worker’s pay goes to paying the interest on that debt.

Yes, the first quarter of 2020 saw folks get serious about what they owed, reducing total credit card debt by $60 billion. But then the COVID-19 pandemic hit along with massive layoffs, and the national unemployment rate settled at around 10% by the end of summer.

All of these factors taken together illustrate how difficult it is to deal with debt and to get out of credit card debt. They also illustrate the importance in committing to the effort to dig your way out, to get to the top of the slide and merely enjoy the ride without worry of crashing at the end.

If you feel like you’re drowning in too much credit card debt, do not panic. The situation isn’t pleasant and the solution takes work, but there are concrete steps that will allow you to get rid of credit card debt, which allows you to take steps to financial freedom and well-being.

In addition, getting rid of high interest credit card debt can help your credit rating because it means you are using less of your available credit. Working your way out means that not only are you helping your personal financial situation, you are helping your future.

List All Of Your Debts

The first place to start is not complicated:  List all debts. Mortgages, car loans, credit cards, student loans … all of them. This should not be difficult. If you don’t have an easy way to list them, a free copy of your credit report is available at That will have all your creditors and how much you owe. List what is owed, the interest rate and the monthly payment. You now have a snapshot of where the money needs to go, and who is charging the most interest.

Lower Your Interest Rates

Interest provides wealth to banks but stress to borrowers. Though It may seem easy to use plastic for a purchase, in the long run it’s more expensive if you can’t pay the bill when it’s due.

Think in real terms. That big-screen TV with the bajillion pixels cost $1,200. Paying $50 a month on that TV at an interest rate of 18% would take 30 months to pay off and eventually cost $1,498.75. That’s an additional $300 of interest payments – or the cost of a Nintendo Switch.

Consumers can try to negotiate a lower interest rate with their credit card companies. The call is worth it; card companies would rather consumers pay something each month than see them default. Be polite and honest with the representative, but don’t be afraid. You matter every bit as much as the person on the other end of the phone.

When you call, have an idea what rate you’d like. That will help as you negotiate. Tell them your positives – how long you’ve had the card, how your on-time payment record is good and that your credit score is improving. If the first try doesn’t get you where you want, don’t fret. Try again. Or wait several weeks, call again and tell them you’ve got a competitor’s card with a better rate and you’ll switch if your current company can’t match the offer.  If at first you don’t succeed ….

Another option is to find a promotional credit card that offers a zero rate. Most of those offers require the amount to be paid in 12-18 months, which provides a faster payoff and reduced interest payments. Be careful, though. The fine print on most of these offers says that if the transferred debt is not paid in the agreed-on time, all interest then becomes due, regardless if you owe $1 or $1,000. Credit card companies are wealthy for a reason.

Several credit card companies, including American Express, Bank of America and Chase, offered relief during the worst days of COVID. Check online for programs through each account.

Finally, consider turning to a nonprofit credit counseling agency like InCharge Debt Solutions, which may be able to help consolidate credit card debt, lower interest rates and reduce your monthly payment with a debt management plan.

Make a Budget & Follow It

When making a budget, list your expenses and be honest with yourself: What is not necessary? Fixed expenses are those like mortgages, car payments, utilities and insurance. They are a part of life almost everyone must accept. Variable expenses might include a gym membership, dining out or entertainment. Though it can be painful, finding extra money to pay off the credit cards could come from cutting back on those expenditures.

One approach that has grown in popularity in recent years is the 50-30-20 model pioneered by U.S. Senator Elizabeth Warren (D-Mass.), in her book, “All Your Worth: The Ultimate Lifetime Money Plan.” Warren proposes dividing income into three pools: 50% for needs (food, mortgage, credit card payments), 30% for “wants” like entertainment or nights out, 20% to savings, which is important to have for an emergency. Ideally savings should be able to support you for 3-6 months if you lose your income.

Warren’s plan is a goal, so don’t fret if the first category is 45%. But it is a goal worth assessing.

Pay Down Your Debt As Soon As Possible

A Harris Poll done for TD Ameritrade showed that 22% of millennials used their stimulus check to pay down or eliminate credit card debt. That was a wise decision.

Typically, eliminating debt takes work. And effort. And commitment. But it works. NASA didn’t get to the moon with a half-baked effort and commitment.

The first step is to assess what cards are charging you the most. Don’t be like the nearly 40% of the population that has no idea what interest rate their credit cards charge. Once you know the rates, focus extra payments on the card with the highest rate.

Why? Because that will reduce the total interest you pay. has a credit card interest calculator that brings life to this quandary. Consider those who owe $2,000 on a card with 18% interest. Paying $40 per month on that would cost $1,725 in interest. Increasing the payment to $80 a month reduces total interest to $526

In real money, that’s a savings of $1,199.

If your budget allows, pay double the minimum balance due. Minimum payments will not help you get ahead on the debt. Think treading water as the water level rises. Once you know what you can afford, go online and set up an automatic payment each month. That’s the best and easiest way to make sure the money is applied to the debt. Set it, click it and forget it.

When the first card is paid, apply the extra you had been paying to the second card. Work your way through all the pesky debts. Then when all debts are gone, uncork that red wine and toast yourself.

Other steps could be taken. A consolidation loan that puts all debt into one loan should lead to a lowered interest rate, which means a lower payment. Homeowners with good credit could use a home equity loan for this purpose. Those who are renting or are in debt with bad credit could turn to a nonprofit credit counselor whose sold job is to help people dig their way out of credit card debt.

Cut Extra Spending

Again, the most basic step is the most obvious: Stop buying unnecessary items with a credit card. Emergencies like a blown water heater may change the outlook but if it’s even remotely possible, stop charging things.

And stop extra spending. Instead of using that extra $40 to watch a sports event at a restaurant (a risk anyway during COVID), stay home, cook on the grill and enjoy the game in the family room. The stress level will go down if the team struggles – this approach has been especially wise for Browns fans the last 20 years  – and the recliner with the drink holder is more comfortable than a bar stool.

Sticking to the budget is an exercise in will and commitment. Bit’s like riding those giant roller coasters: It’s only hard the first time. Make a budget, cut unnecessary spending and stick to the plan. The time for frolic and fun will arrive soon enough.

Find Ways to Increase Your Income

Ask for a raise; the worst that happens is the boss says no. If they say yes, apply all the extra income to paying down your debt.

See if you can add a second job. Even an extra $50 or $100 a month to apply to credit card debt matters.

Of course the second job can be easier said than done, especially if there is a family and you’re a single parent and the finances seem to be overwhelming. But in this economy, there are options that were not there 10 years ago: Through the gig economy.

Driving for Lyft or Uber, delivering meals for DoorDash, walking dogs via Rover, buying and delivering groceries with InstaCart … all can provide some extra income that can be applied to debt and would require just a few hours a week. And they are done on your time. Don’t want to drive or deliver meals on Tuesday? Do it on Wednesday. Setting aside that money for debt repayment is a disciplined way to attack the challenge.

Avoid Bad Deals, Payday Loans & High Interest Rates

There are folks out there who will offer “easy” ways to get out of debt. Be wary, ask questions and read the details.

Checks from credit card companies may seem appealing, but they usually come with extra-high interest rates, which means that instead of reducing debt you’ve added to it. Payday lenders typically charge outrageous rates that only serve as a boulder tied to your feet.

Some credit cards will offer promotional deals that include zero interest. These are an appealing option. But … read the fine print. Twice. Most of these deals require the total to be paid in a set time (12-18 months).

It can’t be stressed enough: Using a promotional zero interest rate can be effective, but you must be disciplined to make sure the loan is paid off in the time agreed to initially.

Also, before agreeing to this “deal,” check to see if there is a balance transfer fee, and the cost. Some charge as much as 5%. All of these are steps by card companies designed to get your money. Zero interest is great, but read the fine print. Then read it again. Then if you’re not sure about something, have a friend or family member read it, to be sure.

Look for Financial Guidance

Counselors are here to help. In the same way a counselor can help individuals emotionally during a tough time in life (a death, divorce), a financial counselor can help during tough financial times. That is their job.

A counselor can help with a debt management plan, or if the situation requires it, personal bankruptcy. He or she can help with debt settlement – which means a company or counselor negotiating better terms on your debt with your creditors. Check the fees before committing to this approach, though.

Credit counseling is a free service that provides help with budgeting, becoming debt free and offering money management tips. Credit counseling is offered by nonprofit agencies and is sometimes called debt counseling. It involves a 30-minute interview with a certified credit counselor who gathers information about your financial situation and helps develop a plan that helps you regain control of your finances.

About The Author

Pat McManamon

Pat McManamon has been a journalist for more than 25 years. His experience has mainly been in sports, but the world of athletics requires knowledge of business and economics. He also can balance a checkbook and keep track of investments with Quicken quite adeptly. McManamon’s experience includes covering the NFL for ESPN, LeBron James for the Akron Beacon Journal and AOL Fanhouse, and the Florida Gators and Miami Hurricanes for the Palm Beach Post.


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