How Do I Eliminate Credit Card Debt?

How can you eliminate credit card debt? Living on credit has become part and parcel of our lives today. Unfortunately, many people are saddled with so much debt that it can make life almost impossible. A minute number have even commited suicide. If you have a massive credit card debt, you are certainly not alone. According to research, the average family in the United States has $8000 in credit card debt and pays about $1000 in interest each year! Throw in a late payment or two, or an over-the-limit charge, and that number skyrockets. Imagine what you could do with that $1000 if it weren’t being spent on interest.

Imagine that you have $5000 debt on one credit card that is charging you 17.5% APR. If you pay only the minimum due of $25/month on this card, you will never pay it off! The interest alone on this card is $73/month!

That means as each month passes your debt situation worsens. By the time you have been paying on this $5000 for 10 years, assuming you have not used the card during this entire period of time, you will owe $20,385! That’s over $15,000 in interest. If you triple your payment to $75, it will take you over 20 years.

So how do you eliminate credit card debt and use that money towards other necessities, savings, and investments? Here are a few simple steps you can take to reach that debt-free status.

Step #1: Move Your Debt

If you have more than one credit card payment, it's better to consolidate your credit or consider moving debt from a card with a higher APR to one with a lower APR. These days, due to competition there are many credit card providers offering 0% APR for a period of six to twelve months. Using these cards will lower the amount of money you are spending towards the interest and get you out of debt faster.

Step #2: Don't Use Your Cards

STOP using your credit cards! This is best way to reduce your credit card debt. Closing your account can negatively affect your credit so it's best to keep your account but cut up your cards if need be. If you have to have a card for emergency purposes, choose the one with the lowest interest rate and cut up the rest. This card should be used for true emergencies only, not mere inconveniences such as buying TVs, games and such like.

Step #3: Consolidate Or Pay off the one with Least Balance

List all of your credit card debts, and the amount you are paying each month. Pay off the lowest amount first. Then use that money to start paying off the second lowest amount. And then the next and the next. Let’s look at an example.

If you have a $7000, $5000, and $2000 card with payments of $150, $125, and $100, you will finish paying off the $2000 card first. Once it is paid off, you take that $100 and put it towards the $5000 credit card. That means you are now paying $225/month. You have increased your payments which will pay off that credit card sooner and will have you paying a lot less in interest. Once that is paid off, you apply the $225 to the $7000 card, making your monthly payment $375. This will greatly accelerate the payment of this card, reducing your interest payments even further. When everything is paid off, you now have $375/month extra to put towards savings or investments!

Step #4: Prioritize Your Debt Repayment

One of the best ways to pay off your debts is to get rid of the highest interest payment first. Looking back at the previous example, you took the lowest and paid it first. If, however, the $2000 card had the lowest interest rate, you would want to pay off the card with the highest rate first. This will save you much more in interest payments.

If the math gets too hard here, don’t despair. There are many places on the Internet where you can find good debt reduction calculators. It is then just a matter of punching in your numbers and reading the report.

Step #5: Consider Consolidation

If you own a home, you may want to consider consolidating your debt using a home equity line of credit. Since a home loan is a secured loan (they can take away your house if you don’t pay) you have a much lower interest rate than you do on your credit cards. Paying a lower interest rate is always a good thing! Not only that, but the interest you pay on your home loan is tax deductible. This is NOT true for credit cards.


By following these steps, anyone can take control of and completely eliminate credit card debt.