How to Make This the Year You Pay Off Credit Card Debt

If you’re like many Americans, the idea of paying off all your credit card debt is enticing, but the reality is intimidating. Your mind might be telling you that there’s no way that can happen—not this year or in 10 years either. If so, it’s easy to fall into a cycle where you ignore your debt and just hope it goes away. But take heart! It doesn’t have to be this way anymore because we are going to inspire you to pay off credit card debt fast in the new year. Here’s how to get started:

Make a list of all your debts and payments.

The first thing you’ll need to do is create a list of all your debts and payments. Write down the amount you owe, the interest rate (if it’s variable), and the minimum monthly payment. If there are any recurring payments that you can consolidate, such as insurance or utility bills, add those too.

Put together a budget that includes how much money you can allocate toward your monthly debt payment. This can be anywhere from 1-5% of your total debt depending on how quickly you want to pay off the card and what loan terms you have with each lender.

Finally, support your plan to pay off as much debt as possible this year. Make smarter financial choices, like saving up for larger purchases instead of using credit cards —the more cash flow that goes toward paying off debt, the quicker we’ll get out from under our own financial weight!

Understand how interest works, and why not paying it down will cost you in the long run.

In order to understand how interest works, it’s important to know that it’s the cost of borrowing money. All loans and credit cards involve an interest rate: the rate at which your balance will increase over time. Interest rates can vary depending on the type of loan you take out, but most credit card companies charge between 15% and 30% APR (annual percentage rate).

There are a few different ways in which interest is calculated and added to your principal balance—the amount you originally borrowed—and each method affects how fast you are able to pay down credit card debt. The most common way is by calculating daily (a process called compounding). This means that every day, an amount equal to 1/365th of your outstanding balance is added as new principal along with any accrued daily interest; this continues until either every last penny has been paid off or until a certain date passes. However, some lenders calculate monthly instead of daily; this results in lower totals being accumulated each month because there isn’t as much time for compound growth over longer periods.

If we were to make only the minimum monthly payment on our debt and not pay off any principal, how long would it take for us to pay it off? The answer is simply one divided by the interest rate. For example, if you had $10,000 in credit card debt with an 18% APR and made only the minimum payment of 2% each month ($200 per year), you’d be paying off your debt for over 42 years! This is because the minimum payment only covers interest and does not go toward the principal. If you want to pay off the debt faster, you must pay more than the minimum amount due each month.

Choose the method that’s right for you.

There are many different ways to pay off credit card debt, and they all have their pros and cons. The method that’s best for you will vary depending on your needs, but it’s important to keep in mind that no one method is going to magically turn your finances around overnight. You may have heard about the debt snowball and the debt avalanche methods before, but there are also other options available for those struggling with large amounts of debt:

  • Debt settlement: where you or a third party negotiates with your creditors on your behalf to reduce the amount of debt that you owe. As a result, debt settlement lowers your overall debt amount, helps you avoid bankruptcy, and pay off debt much faster. This method can have an initial negative impact on your credit score however, over time with positive financial behavior, will increase again. 
  • Debt consolidation: where you take out a loan to pay off your existing debts. This can be a good option if you have multiple loans with high interest rates, but it may not lower your monthly payments as much as you need for your budget.
  • Credit counseling: an organization will negotiate directly with lenders on behalf of individuals who must agree not only to a payment plan but also counseling services. This option is free if done through certain nonprofit organizations like Consumer Credit Counseling Service (CCCS), yet still requires some involvement from borrowers for payments to be made each month correctly; otherwise, there may be additional fees incurred during this process as well. Unlike debt settlement, this method does not reduce the amount that you owe. 
  • Bankruptcy: the final option, bankruptcy is a legal process by which individuals can have all their debts discharged (legally wiped away) after meeting certain criteria that must be met in order for this to happen. This option is only available in certain situations and requires extensive research into your options before deciding on this path because it cannot be reversed once completed. Your credit report will reflect your bankruptcy status for at least seven years and negatively affect your credit score.

When you’re in the middle of a financial crisis, it can be easy to feel overwhelmed and unsure of how to get out of the situation. However, by taking some time out of your day to research all your options, you’ll be able to come up with a plan that works best for you and your family!


In conclusion, paying off credit card debt can be a fun and exciting adventure. You don’t have to live with the stress of high balances any longer—you can choose from a variety of methods that fit your personality and lifestyle. You are in control of your finances, so take charge now! 

If you need help with your credit card debt, speak with one of our IAPDA-certified debt specialists today. They can create a Custom Debt Relief Plan to help you consider what is the right debt-payoff solution for you.

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