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Struggling to pay credit card debt? You’re not alone.

Millions of Americans are struggling with credit card debt and it’s leading to serious budget challenges and life delays. But why are credit card balances so difficult to pay off? And how can you overcome the challenges to take control of your finances?

Credit cards are revolving debt, which is harder to manage

There are two basic types of debt: installment and revolving. Installment debts are loans, where you take out a certain amount of money that you pay back with fixed payments. By contrast, credit cards are considered revolving debt, because the amount you owe changes over time. The more you charge, the higher your required monthly payment.

This type of open credit line is convenient because it gives you flexible purchasing power. But it can be hard to manage within your budget. If you overcharge, the bills can be tough to pay. And it doesn’t help that your creditor often just increases your credit limit, giving you more room to charge.

Credit card interest rates are also high

Another challenge with credit cards are their relatively high interest rates. On average in 2017, credit card interest rates were between 15 to 16 percent, depending on the type of card. That’s high compared to traditional loans that tend to have rates less than 10 percent. And if you have reward credit cards, your rates are probably close to 20 percent. Such high APR makes it difficult to pay off credit debt. It essentially eats up over half of each minimum payment you make.

Let’s say you have a credit card at 15% APR with a 2% minimum payment schedule. Your balance is $1,000, so the minimum payment requirement is $20. However, out of that amount, $12.50 goes to cover accrued monthly interest charges. You only pay $7.50 of the principal debt that you owe.

This gets worse the higher your rates go. If you have rates over 20% APR, then over two thirds of every payment you make covers interest charges. As a result, it takes a long time and a lot of money to eliminate this revolving debt.

Minimum payments are not designed for you to get out of debt fast

People often assume that creditors set minimum payment schedules to help you effectively manage debt. But those schedules are designed to generate revenue for the credit card companies. The longer you stay in debt, the more profit they earn. So, they’re quite happy if you stay in debt forever as long as your account stays current. But while that’s good for creditors, it’s bad for you.

This means that to effectively manage credit card debt, you need to pay more. Ideally, you should pay off all charges in-full every billing cycle. This actually eliminates interest charges entirely. If you start and end each billing cycle with a zero balance, interest charges never apply. This also helps you avoid debt problems.

If you don’t pay in-full then you should at least pay more. How much depends on your budget.

How much credit card debt is too much?

Most experts recommend that credit card payment should take up no more than ten percent of your take-home income. So, if you bring home $2,000 per month, you should only spend about $200 on credit card payments. If your minimum requirements are any higher than that, then you need to eliminate some debt; you also need to stop charging.

This means that many Americans today have too much credit card debt. Consider that average credit card debt is currently over $16,000. On a standard 2% minimum payment schedule, the minimum payments requirement is $320. If you’re bringing home less than $3,200 in income per month, you have too much debt.

Once you recognize that you have too much debt, you need to start exploring solutions. Two things help you pay off credit cards faster:

  1. Lower the interest rate applied to the debt
  2. Increase your monthly payments so you pay principal off faster

Paying off credit card debt when you’re carrying balances

If you have too much revolving debt relative to your income, then you need a plan to pay it off. This usually involves a combination of two of the solutions that we offer below: interest rate negotiation and debt reduction. You basically negotiate with your creditors to reduce your interest rates as much as possible. Then you build a strategy that focuses on reducing debt one account at a time.

Negotiating interest rates on credit card debt

Cut lose from high interest rate debt

If you lower the rate applied to debt, then you eliminate debt faster even if you pay the same amount. That’s because more of each payment you make goes to principal debt repayment, instead of accrued interest charges.

You call each creditor to negotiate a lower rate. You can usually do this through a supervisor in customer service. Rate reductions are not guaranteed. You’ll have more success if:

  1. Your credit score improved since you opened the account
  2. You always pay your bills on time
  3. You’ve been a loyal customer for a number of years

Explore interest rate negotiation »

Implementing a debt reduction strategy

A 5-step plan to reduce debt fast

For this solution, you craft a strategy that focuses on eliminating one credit card debt at a time. This is more efficient and it helps minimize interest charges. If you throw more money at all your balances at the same time, it’s not efficient. So, you make the minimum payments on all your debts, then devote extra cash to paying off one balance.

There are two methods you can use, depending on your budget:

  1. Start with your highest APR debt first to minimize interest charges
  2. Start with your lowest balance first to build cash flow and momentum

You can learn more about credit card debt reduction here »

How long should a debt elimination plan take?

Most experts recommend that an effective debt elimination strategy should take about 3-5 years. If it takes any longer than that, then you’re just wasting money on interest charges and risking financial distress. So, run some calculations if you’re trying to reduce debt to see how long it will take.

Use’s credit card debt calculator »

Choosing the right credit card debt solution for your needs

If you can’t pay off everything you owe using traditional payment methods, you need debt relief. If there was only one way to solve credit card debt problems, it would be easy. But there are a whole range of debt solutions that you can potentially use for revolving debt.

Choice is good, but it can also make it difficult to know which direction to turn. You probably never encounter these solutions until you need them, so there’s a learning curve to finding debt relief.

These four factors determine which credit card debt help option is right for you:

  1. Your credit score
  2. The total balance you have to repay
  3. How much free cash flow you have in your budget
  4. The status of your debt (is it current or charged off)

Both DIY solutions – balance transfers and consolidation loans – all really depend on your credit score. They also usually work for lower volumes of debt. So, if you have over $50,000 to repay, these options rarely get you where you want to be.

Balance transfers work best for limited credit card debt

Consolidation helps pay education costs

Balance transfer are especially good for lower debt, because the goal is to eliminate debt within the 0% APR period. The length of that promo period depends on your credit score. But even with excellent credit, they tend to cap out at 18 months. If you have $20,000 of debt to repay and 18 months to do it, the monthly payments would be over $1,100. That’s not exactly affordable on most budgets.

However, if you have less than $10,000 then it can be extremely beneficial to pay it off completely interest-free. With even a reasonable credit score you could get a 0% APR period of 6 months. If you only have $5,000 in current balances to repay, that equals out to less than $850 per month. As long as you can manage debt payments that high for half a year, this could work.

Is a balance transfer right for you? »

Debt consolidation loans

Debt consolidation eats up smaller debts so you have one big fish to fry

With this solution, you take out a personal loan to pay off credit card debt. This zeros out your balances, leaving only the loan to repay. Loans have fixed payments, so they’re easier to manage. Plus, the interest rates tend to be less than 10%; with good credit, the rate is usually closer to 5%.

You can also adjust the monthly payments to fit your budget with this solution.

  • A longer term provides lower monthly payments; however, this increases total cost because there are more months to apply interest charges.
  • A shorter term minimizes the total cost, but increases the monthly requirement.

Because of this term adjustment flexibility, consolidation loans can help you pay off your debt faster even with lower monthly payments. However, just like regular debt reduction, most experts recommend that you keep the term under 5-6 years (72 payments max). Otherwise, there’s probably a better solution available.

Using a personal loan to pay off credit cards »

Credit counseling, credit consolidation and debt management programs

Credit counseling can save you from drowning in debt credit card debt help

If you have bad credit, do-it-yourself solutions are automatically off the table. You either won’t get approved for them or you won’t qualify at a beneficial interest rate. In this case, you need professional debt help, which usually means you go through credit counseling.

Nonprofit consumer credit counseling services are designed to help you evaluate your situation to find the best possible solution. They can also help you achieve credit consolidation by helping you enroll in a debt management program.

A debt management program is an assisted type of credit consolidation. It’s basically a voluntary repayment plan that the credit counseling agency helps you set up. They negotiate with creditors on your behalf to lower rates and accept an adjusted payment schedule. Creditors are often more willing to negotiate this way, because you’re working with a professional.

Using a debt management program »

Settling debt for less than the full amount owed

Private student loan settlement credit card debt help

Credit counseling is usually the best solution if your accounts are current. But if you’ve already fallen behind and the accounts are in collections, credit counseling isn’t really beneficial. In this case, you may be better off with debt settlement. This is where you settle your debts for less than the full amount that you owe. These are those pennies-on-the-dollar debt solutions you hear advertised that “creditors don’t want you to know about.”

It’s worth saying that debt settlement doesn’t exactly make creditors happy, because you don’t pay them back what you borrowed. As a result, expect some credit damage with this solution. But credit damage usually doesn’t matter as much if you already have accounts in collections. Credit only goes so low (500 for FICO); so, if your score is already bad and can’t fall much further then there may not be an issue.

Could credit card debt settlement work for you? »

Comparing credit card debt help options side by side

Here’s a simple breakdown of the solutions you can explore more in-depth below:

Credit score neededAverage interest rateEffective debt-rangeMonthly payment comparison
Debt reduction plan with interest rate negotiationn/aNegotiate lower rates with individual creditorsUsually only effective for less than $10,000As high as you can comfortably afford in your budget
Credit card balance transferGood to excellent (700+)0% APR for 6-18 monthsUsually best for $5,000-$15,000, depending on budgetTypically higher to pay off debt within intro period
Personal debt consolidation loanFair to excellent5-10% is recommended rangeBest for debt loads below $50,000Varies based on the term you choose
Debt management programWorks even with bad creditTypically negotiated to 0-11%At least $10,000; can work even for debt loads over $100KLowers total monthly payments up to 30-50%, on average
Debt settlement programNot recommended for good creditn/a (rates do not apply to this solution)At least $10,000; some companies cap settlement at $100K, but not allMonthly set aside based on how much debt you need to settle; usually lower compared to other options

Spectrum of Solutions red zone pie chart icon for debt reduction plans

Debt Reduction Strategies

In some cases you may be able to adjust your budget to eliminate your excess debt load on your own without any special tools. Learn how to set up your budget to get on the fast track to debt elimination. Compare two proven methods for debt reduction to see if one will work for you.

Explore the Debt Reduction Strategies Solution »
Find resources for credit card debt relief

Interest Rate Negotiation

If high interest charges are the source of your challenges with credit card debt, negotiating lower interest rates with your creditors may provide the edge you need to eliminate your debt. By lowering the interest rate, more of each payment you make goes to eliminating your debt, making it faster and easier. Find tips here on how to negotiate effectively.

Explore the Interest Rate Negotiation Solution » back and forth money transfer icon for credit card balance transfers

Credit Card Balance Transfers

This is a type of debt consolidation where you transfer the balances from your existing cards to a credit card that has a 0% APR introductory rate on balance transfers. This means for a period of time – usually 12 to 24 months – 100% of every payment you make goes to paying off your debt. This can be an effective method of elimination if you have $5,000 or less in credit card debt.

Explore the Credit Card Balance Transfers Solution » money in hand icon for debt consolidation

Personal Debt Consolidation Loans

A personal debt consolidation loan provides funds you can use to pay off your credit card balances in-full, leaving only the loan to pay back. Loans tend to have much lower interest rates of 10% or less if you have the right credit score, so you can minimize interest charges and get your debt on a more manageable fixed payment schedule. With the right terms, you can get out of debt without a hassle in less than five years.

Explore the Personal Debt Consolidation Loans Solution » talking finance icon for certified credit counseling services

Credit Counseling

Credit counseling is a free service that can help you zero in on the right debt solution for your needs. A certified credit counselor can help you assess your situation to identify the right solution to fit your needs and goals. If you’re eligible for a debt management program, they can also help you enroll directly, but they’re required to review all options so you can get an impartial expert’s perspective without any obligation.

Explore the Credit Counseling Solution » debt management program repayment plan icon

Credit Card Debt Management Program

This is a form of assisted debt consolidation that works extremely well if you have a large volume of debt and a less-than-perfect credit score. You enroll in a program through a credit counseling agency, who works out a payment plan that works for your budget. Then they negotiate with your creditors on your behalf to reduce your interest rates. Total monthly payments are typically reduced by 30-50% and most people complete the program within 60 payments or less.

Explore the Credit Card Debt Management Program Solution » turning money gear icon for debt settlement programs

Debt Settlement Program

This should really only be explored a last resort for debt relief before you file for bankruptcy. If you’ve tried everything else and haven’t had any success, then you can consider a debt settlement plan where you settle your debts for less than the full amount owed. This can cause significant damage to your credit score and results may vary, but it may be your best option if your situation is truly critical.

Explore the Debt Settlement Program Solution » icon for consolidated credit program

Consolidated Credit Program

Consolidated credit programs allow you to consolidate debt, regardless of how much debt you have or your credit score. You work with a certified credit consolidation agency to develop a consolidated debt repayment plan that fits your budget. The program freezes your accounts while you’re enrolled, which helps you break your credit habit and learn better ways to budget for everyday expenses.

Explore the Consolidated Credit Program Solution »



This website is intended for informational purposes and as a reference tool to match consumers with companies that may be able to assist them. Additional Advertising Disclosures are here

DISCLAIMER - does not provide direct debt adjustment services, but, upon request, acts as a locator service for BBB registered companies. It is ultimately up to you to determine whether the companies that we may introduce you to are appropriate for your situation. For debt consolidation programs, where permissible by law, companies may charge a one-time enrollment fee typically from $25 up to $75 for account establishment and for debt relief proposals submitted on your behalf to each of your creditors. Monthly program administration fees will vary from $5 but no greater than $75 depending on your state of residence and/or the number of creditors who agree to accept proposals and become enrolled in the program. Fees subject to change if permissible by law. For debt settlement programs, by law, you may not be charged any fee until a debt settlement is arranged on your behalf, you approve the settlement, and at least one payment is made towards the settlement. Each program offered by independent financial service providers is unique so ask them for their complete details of the program and fees.

Not all consumers are able to complete debt relief programs for various reasons, including their ability to save sufficient funds. The use of debt resolution services could negatively impact your credit and may result in legal action on the part of creditors or collectors for unpaid balances. Consumers enrolled in debt consolidation programs who fail to adhere to the terms of their debt management plan (DMP) may forfeit the benefits of debt relief and revert to the terms of their original creditor agreements. Read and understand all program materials prior to enrollment. Please contact a debt relief specialist for complete program details.

Your debt relief analysis and savings estimate is free, will not affect your credit, and you are under no obligation to enroll in, or purchase, any product or service.

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