Personal Finance

How Can I Pay Off My Credit Card Debts?

If you're saddled with a lot of credit card debt and feel stressed out, you're not alone. Steep interest rates make it easier than it should be to rack up big balances and let your financial life careen out of control.

Three Key Strategies

Fortunately, big debts can be paid off -- even if you owe tens of thousands of dollars. Below are three key ways people do it successfully.

1. Tackle smallest debts first: List all of your outstanding debts, and rank them by size. Then, regardless of their interest rates, pay off the smallest ones first. It will feel like you're getting things done, seeing your number of debts fall as quickly as possible. You'll have fewer accounts to keep track of, and perhaps fewer creditors chasing you, too.

2. Tackle highest rates first: A more financially effective approach is to pay off your highest-interest rate debt first. For example, if you owe $5,000 on a car loan charging you 8% annually, and $20,000 in credit card debt with a 25% interest rate, you would tackle the credit card debt first, as it will more effectively wipe out future interest payments and save you money in the long run.

3. Negotiate: Call your credit card company and ask them if they will lower your interest rates. If you've been a good customer (meaning someone who has a history of paying your bills on time and staying within your credit limits), there's a good chance your lender will play ball to keep you as a customer. Whittling even just a few percentage points off of your rate can save you thousands as you pay down your balances.

Where to Find the Money

You might reasonably wonder just how you'll find the money with which to pay down your debt. Here are some ideas.

Spend less: Spend a little time thinking about how you spend your money, and you'll likely spot some expenses to trim or eliminate.

  • Brown bag three lunches per week instead of buying a $10 lunch, and you can save well over $1,000.
  • Cut your cable cord and switch to streaming movies and TV shows, and you might save $1,500 or more per year.
  • If you're a recreational shopper, spending $100 per week on things you don't need, consider only going to the mall when you need something, and limiting your spending.
  • Call a bunch of insurers, and you might save hundreds per year on your home insurance, car insurance, and so on.

Make more: If you can increase your income, you can decrease the amount of time it will take to pay down your debts.

  • Volunteer for overtime at your job if it offers it.
  • Take on a second job for a while. If you work 15 hours per week and earn $12 per hour, you're looking at an extra $9,000 per year, pre-tax. And remember, it doesn't have to be forever.
  • Your basement or closets might be full of items you can sell on eBay, too.

Think creatively: Look around you with an eye to cashing in or scaling back.

  • Depending on where you live, you might rent out a parking spot in your driveway or garage.
  • Take in a boarder or roommate. Maybe downsize to a smaller home with lower utility expenses, lower property taxes, and lower rent or mortgage payments.
  • Just refinancing your mortgage might be able to save you a lot, too.

Stay Strong

Getting out of debt can be a lengthy and discouraging process, but it can be done! Be committed and diligent, and you'll eventually be much better off.

The $18 million fortune about to be ripped from your credit card

Bad news for your credit card company. The plastic in your wallet may soon be gone forever. And once it is, it could cost Capital One, American Express, Chase, and all the rest as much as $18 million a day! Good news for you. Because when you're finally able to say "goodbye" to the cards stuck in your wallet, a little-known tech company responsible for finally putting an end to plastic could hand its investors life-changing profits. A revealing investor alert from The Motley Fool has the full story. Click here to get it now .

The article How Can I Pay Off My Credit Card Debts? originally appeared on

Selena Maranjian owns shares of American Express and JPMorgan Chase. The Motley Fool recommends American Express. The Motley Fool owns shares of Capital One Financial. and JPMorgan Chase. Try any of our Foolish newsletter services free for 30 days . We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy .

Copyright © 1995 - 2015 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Other Topics


The Motley Fool

Founded in 1993 in Alexandria, VA., by brothers David and Tom Gardner, The Motley Fool is a multimedia financial-services company dedicated to building the world's greatest investment community. Reaching millions of people each month through its website, books, newspaper column, radio show, television appearances, and subscription newsletter services, The Motley Fool champions shareholder values and advocates tirelessly for the individual investor. The company's name was taken from Shakespeare, whose wise fools both instructed and amused, and could speak the truth to the king -- without getting their heads lopped off.

Learn More