How to Eliminate Credit Card Debt in 7 Steps

Being in debt is not fun. Unfortunately, many people do find themselves in debt, carrying balances on multiple credit cards. Even if you have debt that seems insurmountable, you can eliminate credit card debt on your own without using a debt consolidation service. While I think these debt consolidation companies could be helpful to some, they are, for the most part, charging you money for something that you could do on your own.

7 Step Debt Reduction Strategy

The following steps bear some similarity to the Debt Snowball debt reduction method. However, there are some practical tips added to make your debt reduction program more effective.

1. Make a list of your credit card debt

Gather all of your credit cards and make a list. On the list write down the name of the card, what you owe, the current interest rate, and the phone number for each card. Here’s a sample debt reduction spreadsheet that you can use.


Note: In the illustration, the 1st number is the balance, 2nd number is the credit limit, and 3rd number is the interest rate

2. Call your card issuers, ask for a lower interest rate, and check their balance transfer offers


Call each company and ask for a lower interest rate; also check what they can offer you in terms of balance transfer deals. If the first customer service representative is not helpful, either (1) ask to speak with a supervisor, or (2) hang up and call again. There are good reps and bad reps; you don’t want to waste time with the bad reps.

If a company gives you a better offer, feel free to share that information with the others — it might motivate them to be more generous.


  1. Don’t limit yourself to credit card companies. Seek out other lenders who might offer you a better deal. You might try credit unions, bank loans, or social lending networks.
  2. If you cannot get a good deal from your existing credit card companies, consider applying for a new credit card that offers 0% APR balance transfer.
  3. If the rep won’t budge, you can also ask to speak to the supervisor. Supervisors are usually more accommodating.

Note: This step might be harder now, thanks to the economic climate.

3. Sort the cards from the highest to the lowest interest rate


Once you have negotiated your rates with your credit card companies, update the interest rates and order the cards from highest interest rate to lowest. In our example, card A offers the much-prized “no fee 0% APR” transfer*, card B and C provides a courtesy interest rate reduction, and card D won’t budge.

* As pointed out below, you’ll probably have to pay off a card before you are offered a 0% balance transfer, so your other option is to apply for a new card then complete the transfer.

4. Transfer balances from the highest interest cards to the lowest


The quickest way to save money is transfer balances from high interest cards to lower interest card(s)*. For example:

  • Transfer $300 from card D to card A (now that you paid it off, put it away)
  • Transfer $500 from card B to card A (maxing it out)

* Assuming there is no transfer fee. If there’s a fee, you will have to include the balance transfer fee in your calculation.

Also, take a look at the article Should You Transfer Your Credit Card Balance?

There are also a few things you can try:

  • Ask card A to increase your credit limit, so you can transfer even more to that card.
  • Ask card D and card B to reconsider, now that you’ve shown them who’s boss

5. Pay as much as you can off the highest interest rate card


Pay the minimum balance on card C and A, and concentrate on paying the most you can on card B. Let’s assume you pay:

  • $100 on card B
  • $20 on card C
  • $20 on card A

If a card offers a “no payment” grace period, don’t pay anything and put that money toward the highest interest rate card. However, you have to be careful and keep track of when the first payment becomes due; many cards with a no payment period retroactively charge you interest for the entire period (from day 1) if you are late.

6. Snowball your debt


Once card B is paid off, snowball that monthly payment to card C. For instance:

  • $120 on card C ($100 from card B and $20 from card C)
  • $20 on card A

7. Keep your debt snowball going until you finish paying off everything


Once the card is paid off, snowball that monthly payment to the next card so that you’ll be paying $140 per month on card A.

About the Author

By , on May 12, 2013
Pinyo is the owner of Moolanomy Personal Finance. He is a licensed Realtor specializing in residential homes in the Northern Virginia area. Over the past 20 years, Pinyo has enjoyed a diverse career as an investor, entrepreneur, business executive, educator, and financial literacy author.

Leave Your Comment (30 Comments)

  1. Funda says:

    Great article. That’s a very good advice for those who have been also struggling and making ways in how to pay and limit thier debts. I agree with you when it comes to paying down debts. Learning how to quickly pay off personal loans, business loans, and any other kinds of loan can help you save money and reduce stress caused by your debts.

  2. The Phroogal Jason says:

    Thanks for this post. It’s a great breakdown of how to pay off credit cards. I found to be quite helpful. It helps people see how debt snowball or debt avalanche works.

  3. Alexa says:

    This is a very useful article! I really appreciate the tips. Do you think that automatic saving is a good method for paying off credit card debt as well?

  4. Pat says:

    I tried calling my card company to attempt to negotiate a better rate but they wouldn’t budge. They were in fact quite disrespectful to me. My credit rating is not great and they obviously know that. As such they seem to think it’s fine to talk to me almost as if I’m a criminal! I just wanted a little extra finance to help fund my wedding guitarist business and they were wholly unhelpful.

  5. Charles Baratta says:

    One advice that I got from another blog is that if we have multiple credit cards we should eliminate first those credit cards that has the lowest amount of debt, then to the highest debt.

  6. Andy says:

    That’s a good common sense plan on how to attack your debt problem, getting rid of your worst problems first. But I would have to agree that personal finance is more about finance than about math.

    If you have a ton of credit card debt like over $10000, and are in dire straits, meaning you are overwhelmed, I recommend going through a debt settlement company where they allow you to stop paying all your credit card bills immediately in order to offer the CC companies a settlement. It’s risky since you could go into default on your current accounts but if you are nearing bankruptcy anyway it could be a lifeline.

  7. Kevin says:

    Its actually more effective to sort the cards in order of lowest balance to highest balance, regardless of the interest rate.

    Personal finance is more about behavior than math. People are less likely to stay on track when tackling large balances rather than small balances. It also gets your snowball moving much faster to go from smallest balance to largest balance.

    The point that people need to realize is that the interest rate isn’t the problem. The out of control spending and use of the cards altogether is the problem.

    • Pinyo says:

      @Kevin – welcome to Moolanomy. Either method works for me. I prefer the mathematically better approach, but I am sure many people will be more comfortable with the psychologically better approach.

      Great point in the closing paragraph.

  8. Pinyo says:

    @KCLau – Thank you!

    @JvW – Welcome to Moolanomy and thank you for the compliment!

  9. JvW says:

    I love the illustrated step-by-step instructions! Great post!

  10. KCLau says:

    Very nice illustration and clear explanation.
    Good work!

  11. glblguy says:

    Great post Pinyo! There is another option, and one that I prefer…pay them off in order of balance, lowest to highest rather than by interest rate. Sure, mathematically paying off my interest rate makes more sense, but frankly if you have this kind of balance on high interest rate cards your not a pro at math anyway (this includes me).

    Paying off by lowest to highest balance is a psychological win. It makes your debt seem to go away faster and gives you that feeling of progress. I think personal finance is about 10% math and 90% psychology.

    One other note, it used to be you could transfer to a low rate card for free. Most offers now have a 3% or more balance transfer fee, so be aware of that. Now granted, that’s probably still cheaper than the higher rate, but something to consider.

    • Pinyo says:

      @glblguy – That’s a great add. I have seen the “10% math and 90% psychology” discussed before and as a logical person, I was against it at first. However, when I reflect further on this, I really support the argument at this point; that is, the mathematically best option may not be the best for everyone.

  12. Great job on the illustrations! I enjoyed this post. Very good way of showing how to get rid of your debt :). Now there’s no excuse!

  13. Pinyo says:

    @Jen – there’s no such thing as a dumb question here. I am learning too.

    @Matt – thank you. When you ask for transfer, be sure there is no transfer fee; otherwise, you have to do some calculation to see if it’s worth it.

    @Paidtwice – thank you for the clarification. I know what you mean now. Usually, the payments also apply toward the lowest interest rate balance first, so you ended up paying the $200 @ 12% last.

    @Mrs. Micah – thank you.

    @ChristianPF – good add. I added your comment to the post.

  14. Matt Wolfe says:

    Thanks for this post. I’m actually going to apply a little of this method to my own life. I actually have a credit card right now that has a balance of a little under $12,000 on it. The card rate is 18%. I know that it’s crazy but I never really thought of transferring the balance down to lower rate credit cards. I feel silly that I haven’t done this already.

    I run a personal finance site because I want to learn about these things, not because I already know it all. This is great advice.

  15. Jules says:

    Most of this, I agree with.

    But you might not want to max out the balance transfer. Maxing it out is going to increase your usage, and usage has a serious effect on your FICO score.

    Ref: (not my site) – “it is better to maintain a card at 20-30% capacity than max it out”

    • Jenny @ Frugal Guru Guide says:

      Not really. Your % usage is calculated not by card but by credit type. So all your revolving credit is in one basket. It makes no difference whether you have $5000 on one card, maxed out, with five cards and a combined credit limit of $25k or whether you have $1000 on each card. Read your own link–they’re suggesting that your total revolving credit needs to be higher, but they aren’t saying that spreading your debt across multiple cards inherently helps scores.

      We’ve always been near the max of our Discover card because I got it in college and had a limit of $1000. For some reason, Discover is VERY reluctant to raise credit limits–at the same time other companies were giving me $15k-$30k credit limits PER CARD, Discover wouldn’t bump our limit from $1.5k to $2k until we maxed it out (and paid it off) every month for a YEAR. (As an FYI: We put EVERYTHING on that card, even charitable donations, for the cash back. We even put parts of car and furniture purchases on the card briefly. Remodeling expenses and water heaters–on the card!) Despite this, our credit score hovers somewhere above 800 most of the time–I have about $80k of revolving credit available, of which we’ve never used 10%, even during a big remodel.

      • The Phroogal Jason says:

        What your goal is very important in deciding which course of action to pursue. I agree with you that transferring your balances to lower interest rate cards is ideal. The goal is to get out of debt, pay debt off sooner with the smallest amount of interest. If your credit score lowers for a period of time and you aren’t looking at making a bit ticket purchase that requires credit approval, I think you should go ahead with the transfers. Btw, no one should be looking at acquiring more unsecured debt while trying to pay off existing debt. Don’t worry about the score if it has no relation to the actual goal you are trying to accomplish.

  16. Jen says:

    Good explanation – those pictures sure make this process easy for anyone to follow. But, er, I do have just one (stupid) question… what is this ‘APR’ of which you speak?

    • Pinyo says:

      @Jen – APR stands for Annual Percentage Rate, or the effective interest rate that the borrower will pay on a loan taking into account any fee.

  17. ChristianPF says:

    In regards to your step #1, I have had the best luck asking for the rep’s supervisor. I normally find that they are much more open (or able) to negotiate.

  18. Mrs. Micah says:

    I really liked the illustrations on this, make it much more user friendly and helped keep the cards straight.

    Fortunately we were able to pay off our credit card in one fell swoop.

  19. paidtwice says:

    You’ve got to pay off card A before you do the transfer. No way are they going to lower your existing balance to 0%. Otherwise though, nice illustration.

    • Pinyo says:

      Thank you for the correction.

      When I call my credit card companies, they always offer the “no fee 0% APR” transfer, and I don’t even ask for it. May be it’s because I pay off every month and have good credit score?

      I can see how they may be a little more hesitant with folks who owe balance from month to month. In this case, another option is to get a new card that offers “no fee 0% APR” transfer.

      • paidtwice says:

        My credit cards offer me 0% transfer offers too. They want to get your money so you can mess up with them and not pay it off all on time and they get some interest. I do have a good credit score too though 🙂

        I am not saying the card you owe $200 on won’t offer you a 0% transfer – they just aren’t going to reduce your current balance to 0% as well. So the stuff you have on there already will stay at 12% and the new stuff goes to 0%

        Which is why you need to pay off that $200 first ;). then do the transfer.

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