Make this the year you get rid of all that credit card debt for good.

3 minute read

If you’re plagued by credit card debt that just rolls over from one year to the next, why not make it your New Year’s financial goal to finally pay it off in 2022?

Don’t be discouraged if your credit card balances are crazy high. Many people have paid off much higher debt amounts than yours with a little planning and a lot of focus and determination.

Here are five steps to take to get rid of credit card debt in 2022.

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1. Create a realistic budget

When you create a budget each month, you can avoid overspending on daily expenses. You’ll also be more conscious of your spending habits and areas where you can cut back on monthly expenses. Putting together a realistic budget allows you to allocate specific amounts towards credit card debts with a plan to pay them off one by one.

Need some help coming up with a budget? Download a budgeting app like Mint or You Need a Budget (YNAB) to create a budget, track spending and receive guidance on paying off debt.

Find out: 20 Smart Personal Budgeting Tips

2. Come up with a debt payoff plan

If you’re hitting one credit card balance hard one month and then another the next month, your progress paying off credit cards can be slow. To pay credit cards off faster, you’ll need a debt payoff plan that’s organized and focused on paying off each debt one by one.

You’ll still pay on all your credit cards. The difference is that a huge chunk may go to the smallest debts first or the debt with the highest interest rate. With a debt payoff plan, you can see your progress and feel proud of yourself each time you pay off a debt.

For help creating a debt payoff plan, consider meeting with a credit counselor at a nonprofit credit counseling agency. Most nonprofit agencies are free or charge only a small fee.

Find out: How to Reduce Credit Card Debt in 5 Steps

3. Keep track of spending

When you keep track of everyday spending like dining out, gas, entertainment, groceries and other expenses, you’ll be amazed at how much money trickles out of your life. If you have a budgeting app on your phone, the app may link to your bank and credit card accounts so you can track spending. Once you know where you’re spending too freely, cut back and put that money towards credit card balances.

Find out: 6 Easy Ways to Keep Track of Your Spending Habits

4. Pay more than the minimum payment

The worst way to go about paying off a credit card is making only the minimum payment. That strategy may free up more money each month, but you’ll pay for it in the long run. Making the minimum payment on a large balance doesn’t just take forever to pay the card off. Paying the minimum also means you could pay hundreds of dollars in interest.

For example, if you make the 3% minimum payment ($150) on a credit card with a $5,000 balance and a 16 percent APR each month, it will take more than 15 years to pay the card off. And you’ll pay an extra $3,700 in interest.

To find out how much you need to pay on each credit card to pay the balance off faster, punch the numbers into an online credit card interest calculator. Then make bigger payments, even if you have to focus mainly on one card at a time. Before you know it, your credit card debt will be at a more manageable level — or better yet, no longer in your life.

Find out: 4 Reasons to Stop Making Only the Minimum Credit Card Payment

5. Earn extra income with a part-time job

Nobody wants to work two jobs. But what if you took an extra part-time job for anywhere from a few months to a year? If you apply all extra earnings from a second job towards credit card debt, you can knock down balances fast.

Find out: How to Work Side Jobs to Pay Down Debt 

How paying off debt improves your life

When you pay off credit card debt, your credit score could increase, since your credit utilization rate accounts for 30 percent of your total credit score. With no big monthly credit card bills, you’ll also have more money to put towards emergency and retirement savings. Best of all, you may not be so quick to charge so many purchases on a credit card or run up another high balance.

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About the Author

Deb Hipp

Deb Hipp

Deb Hipp is a full-time freelance writer based in Kansas City, Mo. Deb went from being unable to get approved for a credit card or loan 20 years ago to having excellent credit today and becoming a homeowner. Deb learned her lessons about money the hard way. Now she wants to share them to help you pay down debt, fix your credit and quit being broke all the time. Deb's personal finance and credit articles have been published at Credit Karma and The Huffington Post.

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