5 Strategies for Paying Off Major Credit Card Debt

As of the year 2019, Americans surpassed $1 trillion in credit card debt. And, this figure is expected to continue on an upward trajectory over time. According to a report from WalletHub, the average credit card debt per household in Q2 of 2019 reached $8,602.

This all goes to show it’s common for U.S. households to carry credit card debt, and lots of it. But at some point it’s smart to start paying down your balances so you can avoid racking up even more interest on your balances over time.

debt management
Credit: LendingMemo

Here are five strategies for paying off major credit card debt.

Balance Transfers

Credit cards have notoriously high interest rates, sometimes upwards of 20 percent. Thus, your outstanding balance can keep growing month over month even if you stop buying things on your card. One way to get a break from these high interest rates is to transfer your balances from high-interest credit cards to ones with a zero-percent annual percentage rate (APR).

The catch? Well, you’ll likely pay a fee of three to five percent per balance transfer. And balance transfer cards have an introductory period; when it ends, APR bounces back up to its usual levels. You may also have to pay interest on any new purchases you make on the card. Only pursue this strategy if you’re confident you can really chip away at your debts during the promotional period, and that the benefit you’ll gain outweighs the cost of the fees.

Debt Settlement

Wondering how to pay off debt over $10,000? Enrolling in a debt settlement program may be an option. First you’ll make monthly deposits into a special account until you’ve saved up a certain percentage of your outstanding balances. Then negotiators will contact your creditors to ask them to agree to accept less than what you originally owed because they’re at risk of getting nothing.

Through a program like Freedom Debt Relief, some participants have been able to settle debts by paying 30 to 60 percent of their original balance — and that’s including the fee they owe to the program for each successful settlement. However, there’s no way to guarantee any particular outcome. While creditors may choose to settle, they’re not obligated to do so.

Debt Consolidation

Struggling to stay on top of multiple high-interest credit card payments month in and month out? You could take out a debt consolidation loan, which allows you to pay them all off at once. Then you’ll only have to make one monthly payment to your lender until you’ve repaid it in full.

The upside is that you may be able to reduce how much interest you pay because credit cards tend to have higher APRs than consolidation loans. But you must make sure you’re able to commit to making payments on the loan for years to come, otherwise you’ll find yourself back in hot water.

Debt Management

A debt management plan (DMP) is a possible route to paying off your debts in three to five years through a credit counseling agency. You’ll make one monthly payment to your agency and they in turn pay your creditors.

Creditors may agree to lower your interest rates and waive certain fees when they see you’re enrolled in a DMP. It’s up to you to weigh the fees you’ll pay to the agency to participate against how much you could potentially save in interest over the years.


Want to try paying off your credit card debts at home? Get a plan rather than making payments willy-nilly.

Snowballing your debts means paying the minimum on all your balances while targeting your smallest balance more aggressively. Once it’s paid off, you move onto your next-smallest balance, and so on. This approach provides quicker victories, which can be great for morale and willpower.

Avalanching your debts means paying the minimum on all your balances while targeting your account with the highest interest rate more aggressively. Once it’s paid off, you move onto your next-highest interest rate, and so on. This approach helps you pay off your debts for the least amount of interest, saving you money in the long run.

Only you can decide which of these five strategies for paying off major credit card debt is right for you. Do your research and weigh all the pros and cons.

About Carson Derrow

My name is Carson Derrow I'm an entrepreneur, professional blogger, and marketer from Arkansas. I've been writing for startups and small businesses since 2012. I share the latest business news, tools, resources, and marketing tips to help startups and small businesses to grow their business.

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