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4 Steps to eliminate credit card debt

If you saw a spike in your credit card debt last year, you’re not alone.

Of Americans with credit card debt, just over 50% added to their balances since the pandemic started in March 2020, according to a poll by That’s about 51 million people.

The December survey also found that people are confident they can reduce or even wipe out their debt with 64% saying they thought they could do so within the next decade. 

You can get your credit card balance under control with this 4-step plan. 

1. Check your credit report

Get a handle on how much money you owe by reviewing your credit report.

A credit report tells you all your past and current credit accounts (including credit cards), account balances, and payment history. Lenders use your credit report to calculate your credit score. A credit score predicts how likely you are to pay a loan back on time. This is how lenders decide whether to lend you money and what interest rates to offer you. 

Your credit report may contain errors. These errors could negatively impact your interest rates and ability to borrow money. If you find errors, you can dispute them with the credit reporting company.    

For more on credit reports and scores, check here.

2. Make a payment plan

Once you know how much money you have to pay off, it’s time to create a payment plan. 

Here are a few DIY methods to choose from:

  • Pay more than the minimum. Only paying the minimum every month costs you more money over time. Carrying over a balance causes you to accrue interest. But if you pay off the full balance by the due date, you’ll be spared from interest. Even if you can’t pay off the total amount every month, pay as much as you can to keep the interest down.  
  • Debt snowball. If you have multiple loans to pay off, focus on paying off the smallest loan first. Once that’s cleared, use the money you would have put toward that loan into paying off the bigger loans. Nerd Wallet offers a debt snowball calculator to help you determine if this strategy is right for you. 
  • Debt avalanche. This method prioritizes debts with the highest interest rates to cut down on interest payments over time. Nerd Wallet provides a calculator you can use to decide if debt avalanche is your best option.

If none of those strategies are doable or you need more help, contact your creditors to see if they’re willing to negotiate payment terms or offer a hardship program

3. Keep track of payment due dates

Missing payments can lower your credit score. And depending on the terms of your credit card, you may get hit with late fees and/or a penalty interest rate. This will add to your credit card balance. 

Be sure to make payments on time. Put due dates in your calendar and set reminders so you never miss them. 

Or, set up automatic payments.

4. Negotiate a lower credit card interest rate

Lowering your credit card interest rate won’t help you with your current balance. However, it may help you cut down your future balance. 

While not all credit card companies will lower your interest rate, it’s always worth asking. Your creditor may be more inclined to lower your rate if you’ve been a long-time customer and/or you make your payments on time.  

If you still need help 

  • Contact a nonprofit credit counseling company like the National Foundation for Credit Counseling (NFCC) or GreenPath to create a debt management plan. The nonprofit negotiates with creditors on your behalf and consolidates your debt into a single account. 
  • See if you qualify for debt settlement. Debt settlement is where a creditor agrees to take less than the amount that you owe. Often, you hire a debt settlement company to negotiate on your behalf. Be aware that debt settlement can have adverse effects on your credit score. The Federal Trade Commission also warns there are debt settlement scams.
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