6 proven strategies to pay off credit card debt faster in 2023

How to pay off credit card debt

Getty Images

Credit card debt is stressful — and costly. The good news? Like thousands of others have before you, you can get out of it — though there is no one-size-fits-all answer as for the best way to accomplish reaching a $0 balance, pros say. Here are six options for getting out of credit card debt, and the pros and cons of each below: 

  • Pay off the account with the lowest balance first, while continuing to pay the minimums on all other accounts.

  • Pay off highest interest debts first, while making the minimum payments on the rest.

  • Do a balance transfer to a 0% APR card and aggressively pay that down.

So which is the right strategy for you?  It depends, and we talk to pros so they can help you pick the best strategy for you.

1. Pay off the account with the lowest balance first, while continuing to pay the minimums on all other accounts.

It can be motivating — and help you stay motivated on your debt payoff journey — to knock out your entire lowest-balance debt. This is a strategy that’s commonly referred to as the “snowball method,” because it helps build up momentum to pay off debt.

To do it, make a list of all your account balances in order of smallest to largest — and include the minimum payment amount for each — and allocate funds to pay the minimum amount due on all of your accounts except the one with the smallest balance.

For the account with the lowest balance, pay as much of the total due as you can until you’ve paid off all the debt and then continue to do the same thing with the account that’s next on your list.

Pros and cons

  • You’ll likely notice progress quickly depending on how low your lowest balance is

  • This method can help provide motivation to continue paying off debt

  • You may pay more interest over time compared to paying the high-interest debt first

2. Pay off high-interest debts first, while making minimum payments on the rest.

This is known as the “avalanche method,” and it’s the most advantageous from a dollars and cents perspective because you’re canceling out your highest-interest accounts sooner rather than later.

Once you’ve paid off the account with the largest balance, you put the same amount of money you were paying towards that debt to the account with the next highest interest rate. Then you continue to do this until you’ve reached the bottom of your list of accounts. Of course, you’re always paying the minimums on all your debts.

Pros and cons

  • You’ll save the most money by tackling your highest interest rate debts first

  • You can lower how much you’re paying in interest

  • Progress can be slow at first

  • It can take time to make a dent in large balances

  • Staying motivated can be challenging

3. Do a balance transfer to a 0% APR card and aggressively pay that down.

With a balance transfer, you’re simply moving high-interest debt from one credit card to another that doesn’t charge interest for a set period of time, usually up to about 21 months. (See some of the best balance transfer cards of 2022 here.)

“Once the promotion ends, the interest rate goes back up, so if you can, pay down your debt completely while it’s interest-free,” says Sara Rathner, personal finance expert at NerdWallet.

Taking advantage of a 0% balance transfer card involves opening a new credit card with an interest-free promotional term, and Ted Rossman, senior industry analyst at Bankrate, says this is his favorite debt payoff tactic because of how high interest rates are.

“Be disciplined about paying it off. I suggest refraining from making any new purchases with the card, since the interest rate will skyrocket once the promotional period ends,” says Rossman.

To come up with a successful payment plan, given that you won’t have to pay interest, divide what you owe by the number of months in your 0% term and try to stick with that monthly payment plan so you can achieve a $0 balance by the time your regular APR kicks in. (See some of the best balance transfer cards of 2022 here.)

You can save hundreds of dollars if you have a few thousand dollars in credit card debt, because you aren’t being charged interest. “There’s usually an upfront transfer fee of 3% to 5% of the amount being transferred, but it can still be well worth it,” says Rossman.

But doing a balance transfer may require a high credit score depending on the card, so it may not be an option for everyone. “Ideally, this card would also have no annual fee and would charge a $0 fee for balance transfers, however even a one-time fee of 3% to 5% of your existing balance to initiate a balance transfer could be much better than paying 20% or more in APR,” says Ewen.

Pros and cons

  • Can save you money by you not having to pay interest

  • Requires discipline to pay the card off before the intro period ends

  • There may be a fee to do the balance transfer or an annual fee on the card

4. Take advantage of debt consolidation using something like a personal loan, which could offer a lower interest way to consolidate debt.

Taking out a personal loan is a popular form of debt consolidation, and if you have good credit, you might be able to get a loan with an interest rate that’s significantly lower than your credit card’s rate. “You can use this loan to pay off your higher-cost credit debts and then you repay the personal loan company — which sure beats paying 15% to 20% on credit cards,” says Rossman. See the lowest personal loan rates you may qualify for here.

Another way to consolidate debt: Sign up for a debt management plan offered by a reputable nonprofit credit counseling agency, such as Money Management International. “These often involve something like a 6% rate over 5+ years plus nominal monthly fees,” says Rossman.

“Many online lenders issue what’s called a credit card consolidation loan. They’ll effectively consolidate the balances on your high-interest cards by combining multiple payments into a single one, paid out monthly over a set term,” says Ewen.

Pros and cons

  • You need to have great credit

  • A nonprofit credit counseling agency can provide you with helpful advice along the way

  • You’ll have one equal monthly payment to pay off a personal loan

  • It can be easier to budget for

  • These loans have their own APRs, so this really only makes sense if the loan’s rate is lower than the rest of your cards

  • Some lenders require high credit scores to qualify for the lowest rates, so if your score is low, this may not be an option

5. Paying more than the minimum on your cards at all times.

Ideally, everyone would pay their entire credit card balances in full every month, rendering interest a moot point. Unfortunately, only about half of cardholders are able to do that.

“If you can’t pay the entire monthly statement balance, it still makes sense to pay as much over the minimum as you can afford. If you only carry a balance for a short time, the interest charges probably won’t be so bad,” says Rossman.

Pros and cons

  • Paying just the minimum will lock you in a cycle of debt for years; paying more will shorten that cycle

  • If you pay the bill in full every month, you can avoid debt entirely

  • The vast majority of credit card issuers impose no penalties for making mid-cycle payments

  • It can be tough to do this when you’re struggling with other bills

6. Take out a home equity line of credit (HELOC) to provide a lower interest way to consolidate high-interest debt.

For borrowers with substantial equity in their home, HELOCs can aid in consolidating high-interest debt like credit cards.

HELOCs are generally composed of a two-part structure; most commonly a 10-year draw period and a 20-year repayment period that together equal a 30-year term. A borrower can withdraw as much or little as they like during the draw period, but once the repayment period begins, money can no longer be withdrawn and the borrower must begin to repay the principal loan in addition to interest.

The amount of money available to a HELOC borrower will vary as the loan amount is based on how much equity one has in their home. See the best HELOC rates you can get here.

Pros and cons

  • HELOCs tend to be one of the most affordable loan types for homeowners with significant equity in their home

  • If you don’t repay your HELOC, you can lose your home

  • You may need a high credit scores, low debt-to-income ratios and substantial equity in your homes to qualify

Other things to know

Ultimately, whichever method you choose, you will likely need to budget to come up with the extra money to repay your debt. “Start by writing down everything you spend money on in a month. Don’t judge yourself, just write it down,” says Rathner. Then, carefully analyze the total take-home income you expect to earn each month. “Map out all of the essential items that must be paid for like housing, groceries, utilities and take a very critical eye to your discretionary spending,” says Ewen.

Bankrate recently found that 51% of Americans who have ever had a subscription or membership account have experienced unwanted charges. “It’s easy to forget about free trials that turn into paid subscriptions. Even things you once willingly paid for may now be wasteful,” says Rossman. “Look for other ways to be a more thoughtful consumer as well. You don’t need to cut back on everything, but think long and hard about whether or not something is bringing you joy and delivering value,” says Rossman.

Tools and resources

This debt pay off calculator and these comparison tools can help you shop for credit cards, loans and other financial products. Loan consolidation calculators, credit card balance transfer calculators and credit card minimum payment calculators are all available online and can be useful when trying to determine monthly payments, interest rates and how quickly you’ll be able to pay off your debt. 

Ultimately, the best resource is your own analysis. “Every consumer has different spending patterns and debt balances, so take the time to carefully evaluate your finances, cut out any unnecessary discretionary spending and work diligently to pay off your outstanding debt as quickly as possible,” says Ewen.

The advice, recommendations or rankings expressed in this article are those of MarketWatch Picks, and have not been reviewed or endorsed by our commercial partners.