Have $10K in Credit Card Debt? Here's How to Pay It Off

Having any credit card debt can be stressful, but $10,000 in credit card debt is a different level of stress. The average credit card interest rate is over 20%, so interest charges alone will take up a large chunk of your payments. On $10,000 in balances, you could end up paying over $2,000 per year in interest.

It can feel disheartening, especially when you're not sure what you can do to make real progress. But there are several great tools and strategies you can use to take control of your credit card debt. If you're in this situation, here's a step-by-step guide on what to do.

Make it your No. 1 financial priority

The biggest factor in getting out of credit card debt is how much you pay toward it every month. This is one of the reasons why some people stay in debt much longer than others. They don't change their spending habits much, or they only make minimum payments on their credit cards.

When you have $10,000 in credit card debt, the best thing you can do is put all your disposable income toward it. Cut costs wherever you can. If you've been going out for dinner or drinks every weekend, switch to low- or no-cost activities, such as a movie night at home. If you're not sure where to spend less, any of the top budgeting apps can show you places to cut back.

Put a pause on your savings and investments, as well. These are good financial habits, but your credit card debt should be your focus until it's paid off.

Lower your credit card interest rates

As mentioned earlier, one of the reasons credit card debt is so hard to pay off is the interest charges. Fortunately, you may be able to get a much lower rate than what you're currently paying.

There are a couple of ways you can do this. If you have a good credit score, you could potentially qualify for either of the following:

• Balance transfer credit cards: These offer a 0% intro APR on balance transfers, making them perfect for refinancing credit card debt. You can transfer over your card balances and pay them down with no interest charges during the intro period. Some cards offer intro periods of 18 months or longer.
• Debt consolidation loans: These are personal loans made for paying off debt. They typically have much better interest rates than credit cards. Once you're approved for the loan, you use that to pay off your credit cards. Then, you only need to make your loan payment going forward.

I'd recommend starting with a balance transfer card and paying off as much as you can during the 0% intro APR period. Once that ends, you can either open another balance transfer card or get a debt consolidation loan.

What if your credit score isn't high enough to qualify for either option? In that case, call all your credit card issuers and ask them to lower your interest rate. Card issuers are sometimes willing to work with you, especially if you've always made your payments on time.

Decide on a payment plan

Your payment plan starts with your monthly payment amount. Figure out an amount you can afford to pay every month, and remember that the higher it is, the faster you'll be out of debt. For example, you could commit to $300 per month, $500 per month, or more, depending on your disposable income.

If you opened a balance transfer card or a debt consolidation loan, then you'll likely only have one payment to make. But if you have credit card debt spread out across multiple cards, then you'll also need to decide which cards to prioritize. There are two popular debt repayment methods:

• Debt avalanche: Make minimum payments on all your credit cards, and put all your leftover money on the card with the highest interest rate. Once that card is paid off, move on to the next card with the highest interest rate. This saves you the most money on interest charges.
• Debt snowball: Make minimum payments on all your credit cards, and put all your leftover money on the card with the lowest balance. Once that card is paid off, move on to the next card with the lowest balance. This method is designed to get you that first "win" of paying off a credit card as quickly as possible.

The debt avalanche is better from a financial standpoint. But the debt snowball often helps people stay motivated. Both work, it's just a matter of which one works for you.

Keep your eyes on the prize

If you follow those steps, you're going to see your credit card balances get lower and lower. Resist the temptation to relax once you get your debt down to $5,000 or $3,000. It's fine if you want to celebrate these milestones, but keep following your payment plan. Otherwise, it's easy to get off track.

A $10,000 credit card balance may seem daunting, but you could pay it off faster than you think. With a 20% interest rate, you could get rid of that debt in 25 months if you're able to pay $500 per month. And that's without lowering the interest rate at all. If you'd like to run some numbers yourself, our credit card payoff calculator can tell you how quickly you could get out of debt.