Here’s What to Do If You Owe a Lot of Money on Your Credit Cards

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  • To pay off credit card debt, only spend on the essentials and put all your spare money toward your credit cards.
  • See if you can qualify for debt consolidation options, such as a balance transfer credit card or a loan.
  • Find a repayment plan you like and stick to it until your debt is paid off.

There's a way out if you make it your top financial goal.

While credit cards can be useful, they can also get you into serious financial trouble. If you owe a lot of money on your credit cards, you'll get hit with expensive interest charges every month. Considering the average credit card charges about 20% in interest per year, those extra charges can be tough to manage.

That makes trying to pay off credit card debt feel like being stuck in quicksand. But even when you owe a large amount, it's still something you can solve. It's not going to be easy, but if you follow the right approach, you'll get it paid off.

Cut back on spending everywhere you can

Having a large amount of credit card debt is a financial emergency, so it's important to treat it that way. Do everything you can to pay down card balances as quickly as possible. If you don't take drastic measures, it's going to be difficult to get out of debt.

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You'll need to get strict about your spending habits. Going forward, if it's not an absolute necessity, you probably shouldn't spend money on it. This means:

  • Cancel your streaming services. Switch to free streaming services for the time being.
  • Stop going out for food and drinks. Stick to preparing meals at home, and find free ways to hang out with friends.
  • Don't go shopping in stores or online. Stay away from Amazon and any other stores you frequent.

Follow this same approach with any other expenses you don't need. It may seem extreme, but it will significantly increase how much you can put toward your debt.

Start putting every spare dollar toward your credit card debt

Now that you're only spending on the bare necessities, you'll have more extra cash than usual. Use all of it for your credit card payments; don't set any of it aside for savings goals or investing.

You might be tempted to divide your money among multiple financial goals. There are situations where that works, but in this case, your credit card debt is by far the most pressing issue. When you have debt costing you 20% in annual interest, paying that off is like getting a 20% return on your investment. That's better than you're going to get using your money for anything else.

Look into debt consolidation options

One of the ways to make high credit card balances more manageable is debt consolidation. You can do that with either of the following:

The idea is that you get a balance transfer card or loan and use it to pay off your credit cards. Then, you only have one payment per month going forward. You could also save on interest charges this way. Balance transfer cards have a 0% intro APR, and some of them offer this for 18 months or longer. Debt consolidation loans don't, but they tend to have lower interest rates than credit cards.

Debt consolidation isn't an option for everyone, though. There are a few potential obstacles that could get in your way:

  • You need a good credit score to qualify for the best options. If you don't have one, you likely won't qualify for balance transfer cards or low-interest loans. You may still be able to get a debt consolidation loan, but make sure the interest rate is lower than what you're paying on your credit cards.
  • You may not be able to borrow enough to cover significant credit card debt. Balance transfer cards have credit limits, and lenders will only let you borrow a loan up to a certain amount. If it's not enough for all your debt, use debt consolidation to pay off the cards with the highest interest rates first.

Find a repayment plan you like

There are lots of methods people use to pay off credit card debt. Two of the most popular are the debt snowball and debt avalanche. With the debt snowball, you put all your extra money toward paying off your card with the lowest balance first, so you pay off an account more quickly and get a "win" to keep you motivated. With the debt avalanche, you put your extra money toward your card with the highest interest rate first, then move on to the next-highest interest rate. This results in paying less interest in the long run.

If you're able to consolidate all your debt, you won't need to worry about that. But there are still payment tricks that may help. For example, some people like making multiple credit card payments per month so they aren't tempted to spend their extra money.

Remember, paying off a lot of credit card debt is a process. It's going to take time, but you'll see the progress as your balances drop. Keep chipping away at what you owe, and you'll bring those balances down to $0.

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