Struggling with Credit Card Debt? Get your FREE quote today!

How to Eliminate Credit Card Debt Faster

Written by:
Financial Literacy Specialist
3 reasons you can't eliminate debt: This is why your monthly payments never seem to make a dent

Paying off credit card debt should feel like a race to the finish, but often it feels more like you’re stuck running on a treadmill. According to creditcards.com, the average U.S. adult owed $5,673 in 2019.

You make payments month after month, but you never seem to get anywhere. So, why can’t you eliminate credit card debt quickly?

1. Minimum payments don’t work to get you out of debt

If you're frustrated that you can't eliminate credit card debt on your own, ask for help

Credit card companies are not evil, but as businesses, they exist to make a profit. They extend a line of credit for you to use and interest charges are the cost of that convenience. That’s how your creditors make revenue, so they’re fine if you stay in debt forever.

Minimum payment schedules are not efficient methods of debt repayment. You only pay a small percentage of your balance – usually around 2-3 percent. It takes a long time to eliminate debt a few percentage points at a time. What’s more, if you make new charges each month, it can seem like you never get anywhere.

2. High APR eats up over half of every payment

Interest charges are a big part of the reason you can’t pay off your cards and other balances. If you make minimum payments at 15% APR, roughly one half of each payment covers accrued monthly interest charges. At 20% APR, it jumps to two-thirds of each payment.

Infographic

Are Your Credit Cards Gluttons for Payments?

Consolidated Credit offers a new infographic that explains how high credit card APR eats away at every payment you make, preventing you from reaching zero….

Read more

3. Even with more money, debt elimination can be slow

When minimum payments don’t work, you can try paying more. This usually involves implementing a debt reduction plan. You determine how much you can afford to pay and set that as a fixed amount that you pay each month.

Before you consider any other solutions, you should review your budget to see how much money you could allocate for debt elimination. Then you can use the calculator below to determine how quickly you could pay off your balances utilizing this strategy.



Even if you cut your budget down to just necessities, it can take a long time to reduce your debt using this method if your balances are high. If you’re not making the progress you want, then it’s time to find a better way to eliminate your balances.

A certified credit counselor can help you evaluate your best options to eliminate credit card debt.

Finding the best way to eliminate credit card debt

There are three basic ways to pay off credit card debt faster without causing credit damage or risking your assets. You can:

  1. Use a balance transfer card, paying off the debt as quickly as possible with large interest-free payments
  2. Consolidate the debt, using a low-interest rate personal loan to pay off your balances
  3. Enroll in a debt management program with the assistance of a credit counseling agency

The right choice depends on your debt, credit, and budget.

Option 1: Balance Transfer Credit Card

This option is best if you have good free cash flow in your budget and a good credit score. You open a new balance transfer credit card at 0% APR. Then you transfer the balances from your existing cards, with a balance transfer fee between 3-5% of the transferred balance.

You have a certain number of months to pay off your debt interest-free. The length of time depends on your credit score and the card issuer; introductory periods typically range from 6 to 18 months.

Option 2: Personal Debt Consolidation Loan

Here you take out a personal loan for debt consolidation. You qualify based on your credit score and choose a term that offers monthly payments that work for your budget.

Most unsecured loans offer terms of 12-60 months. A shorter term will increase the monthly payments but decrease the total interest charges applied to your debt. A longer term will lower the monthly payment but increase your total costs. You want to choose the shortest term you can comfortably afford to pay to get out of debt as quickly as possible.

For this solution to be as beneficial as possible, you generally want an interest rate that’s no higher than 10 percent.

The money from the loan goes to pay off your balances, leaving only the loan to repay at a lower interest rate.

Infographic

Reach Zero Faster with Debt Consolidation

Credit card debt consolidation can help you traverse down a mountain of unpaid debt faster and easier. Learn how to reach the debt-free finish line….

Read more

Option 3: Debt Management Program

If you have too much debt to pay off on your own or a low credit score, you may need help reaching debt-free status. In this case, you can contact a credit counseling agency that comes in and works on your behalf. They help you work out a repayment plan that works for your budget. Then they contact your creditors to arrange for lower interest rates.

You can qualify for a debt management program regardless of your credit score. You make one payment to the agency and they distribute the payment to your creditors as agreed. It’s like an assisted form of debt consolidation without a loan.

Here are a few examples of the results you can see with a debt management program:

Case Study

Walter from Hollywood, FL

“I wish to congratulate and also thank Consolidated Credit for assembling the incredible team of homerun hitters that you have assembled in your customer service department. They are your best representatives and stand as bright shining lights to the debt-besieged public. ”

Where he started:
  • Total unsecured debt: $29,397.00
  • Estimated interest charges: $16,752.75
  • Time to payoff: 13 years, 6 months
  • Total monthly payments: $1,175.88
After DMP enrollment:
  • Average negotiated interest rate: 4.19%
  • Total interest charges: $1,988.74
  • Time to payoff: 4 years, 5 months
  • Total monthly payment: $594.00
Time Saved

9 years, 1 month

Monthly Savings

$581.88

Interest Saved

$14,764.01

Case Study

Magalys from Woodland Park, NJ

“The best thing I could have done was to make that first call and I’m glad I did. I’m almost debt free. Thank you! ”

Where she started:
  • Total unsecured debt: $24,454.00
  • Estimated interest charges: $13,786.94
  • Time to payoff: 13 years, 6 months
  • Total monthly payments: $978.16
After DMP enrollment:
  • Average negotiated interest rate: 2.70%
  • Total interest charges: $2,149.04
  • Time to payoff: 3 years, 1 month
  • Total monthly payment: $710.00
Time Saved

10 years, 5 months

Monthly Savings

$268.61

Interest Saved

$11,637.90

Case Study

Liz from Puyallup, WA

“When I stumbled across Consolidated Credit it’s seemed too easy to be true but we decided to give it a try. Now 2½ years later I couldn’t be happier. We could never have paid this off on our own. ”

Where she started:
  • Total unsecured debt: $55,638.00
  • Estimated interest charges: $32,117.78
  • Time to payoff: 16 years, 1 months
  • Total monthly payments: $2,225.52
After DMP enrollment:
  • Average negotiated interest rate: 6.27%
  • Total interest charges: $4,208.58
  • Time to payoff: 4 years, 4 months
  • Total monthly payment: $1,137.00
Time Saved

11 years, 9 months

Monthly Savings

$1,088.52

Interest Saved

$27,909.20

We can help you evaluate all your options and choose the best solution for your needs.