How to Get Out of Credit Card Debt Without Ruining Your Credit

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Credit cards can be both a blessing and a curse. Being able to fund whatever you need in the moment can truly be helpful , especially during emergencies. Unfortunately, it is much harder to pay off the debt you’ve racked up than it was to build it. And Americans have racked up a lot of credit card debt .

Here’s the good news: there are ways to get out of credit card debt that doesn’t require you to pay back every penny you’ve spent (along with some hefty interest charges). Here’s the better news: these methods should be able to reduce your debt without wrecking your credit. Curious? Keep reading.

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1. First, Try Doing it Yourself

DIY isn’t just for minor home repairs or crafting projects. If you have the time and energy, you can put in the work to reduce your credit card debt all by yourself. If you’re more of an independent operator, here are some things you can try.

Choose a Payment Strategy

Different strategies will work for different situations. A couple of things to consider when choosing a strategy are: disposable income, credit score and the available time and effort you can put towards getting out of debt.

The Debt Snowball Method

This is where you pay off your debt with the smallest balance first , tackle the next smallest next, and so on. You’ll still make the minimum payments on your other debts but dedicate as much as you can afford to pay off your smaller debts in full. The hope is that by paying off your smaller debts, you build momentum to help you tackle the larger ones. Sort of like how a snowball rolling downhill gets bigger and goes faster as it rolls. Repeat this process until you’re debt-free.

Use this calculator to figure out how much you could save.

The Debt Avalanche Method

The debt avalanche is the opposite of the debt snowball. With this method, you tackle the credit card with the highest interest rate first and then continue in descending order of interest rate (instead of balance due). Once again, you’ll continue to keep making the minimum payments on your debts with lower interest rates. This method is popular because it reduces the amount of money you pay in interest charges over time. Using this method versus the snowball method can be cheaper in the long run.

Work With Your Creditors

Creditors are just trying to look out for their bottom lines. And they know that getting you to pay something is much better than you disappearing, possibly going into bankruptcy and then not paying anything at all.

Therefore, if you feel overwhelmed with credit card debt , you should contact your creditors instead of trying to dodge them. Tell them that you’re having difficulty making your payments and inquire about their hardship programs. Ask to renegotiate your interest rate or, if you are really hurting, a settlement . While you do this, though, you need to keep two things in mind:

Lenders are a Business

And businesses exist primarily to make money. The goal for any business — including credit card companies — is to optimize the amount of money they bring in, in exchange for their efforts. They know that going through the long collection process or suing you isn’t cost-efficient. They will recover more money if they work out a deal with you before turning to those other options.

Lenders are People

It’s so much easier to think of them as faceless corporations just trying to get one over on the little guy. Here’s the truth: Most don’t want to take advantage of you. In fact, most have programs already set up to help debtors in your position, whether dealing with being laid off, surprise medical expenses , health problems, etc.

If you can develop a repayment plan that will benefit their bottom line and/or appeal to the humanity behind the corporate façade, your creditors have every reason to hear you out. Are you having trouble making progress with the current representative (i.e. person ) that you have on the line? That’s fine. Hang up, call back and try again with a different representative. Remember sometimes negotiating with creditors can be a numbers game.

Pay More Than the Minimum Balance (Depending on Strategy)

Unless the card issuer has temporarily deferred payments, every credit card has a minimum monthly payment due. This amount includes the principal balance and interest that’s accrued during that period.

The average APR on unsecured credit cards is between 23.14% and 25.8% . That boils down to roughly 1.93% to 2.15% of the total monthly balance. The sooner you get your balances down, the less money you’ll pay in interest fees.

Ultimately, whatever debt repayment strategy you choose, don’t spend too much time worrying about choosing the right one. The key to getting out of credit card debt is steadily paying down your monthly balances. It’s up to you if you go with the highest balance, highest interest rate, or another option.

Get Your Creditors on Your Side

At the end of the day, creditors just want to get their money. They don’t want to harass their customers about making payments, nor do they want to sell or transfer their debts.

They might be willing to lower your interest rate if you’re proactive and transparent about your financial situation. Or they might provide other resources on how to pay off your debts. Either way, be prepared to explain why you need help and what steps you’ve already taken to improve your finances.

Credit Card Debt Relief During COVID-19

During the height of the COVID-19 pandemic, many major credit card issuers offered credit card debt forgiveness or relief to borrowers. These programs often included more flexible repayment plans, deferred interest, and lower monthly payments. They were available to those who lost their jobs or couldn’t make payments due to the pandemic.

There aren’t as many protections in place for credit card users now, but it doesn’t hurt to contact your issuer and ask. Your credit card issuer’s contact information is on their main website.

Try DIY Debt Settlement

No rule says you must hire a third party to handle your debt settlements yourself. If you are willing to do the work and research, you can do everything a professional would do.

That said, DIY debt management and debt settlement are not risk-free. Experts usually have an easier time navigating the process . Individual borrowers also often find the amount of work that is involved intimidating and nope out before the process is complete. This is understandable since debt negotiation can sometimes take several years to complete.

Is it worth trying to settle credit card debt yourself? Check out this video to learn more:

Find Help If You Need It

People with multiple high-interest cards or high balances can’t always get out of credit card debt independently. Fortunately, many debt-relief options, resources, and tools are available for coping with debt. Before choosing one, however, ensure you fully understand all its implications. That way, you can get the most use out of it. If you do decide that you need expert help, here are a few options to consider:

2. Consult a Credit Counseling Agency

One of the best sources for help with credit card debt is a credit counselor . These agencies or services can help you put together debt management plans.

While there are for-profit credit counseling agencies, it may be better to opt for one that is nonprofit. Their services won’t be 100% free, but they will be vastly more affordable than what you’d pay a for-profit agent.

Here is how a credit counseling agency operates:

First You Choose a Service Provider

Hiring a credit counseling agency to create your debt management plan basically puts the responsibility of your credit in the hands of a trained professional. Every month you will send a payment to your agency. The agency then divvies up that payment among your creditors based on their established payment plan.

Then the Provider Attempts to Negotiate on Your Behalf

What’s great about hiring a credit counseling agency is that they take over all the management of your accounts for you. Part of this will involve negotiating with your various creditors on your behalf. They can help reduce your interest rate, lower minimum monthly payments, etc.

You should know that, though it is possible to save money with a debt management plan, that savings is seen in reduced interest rate payments. You will still likely be responsible for paying the full balance of what you’ve spent so far.

That means that a debt management plan is rarely the cheapest option available to you, but it is the best option if you want to keep your credit score healthy because your creditor won’t have to settle for less.

3. Debt Consolidation

Debt consolidation is exactly what it sounds like: it is when you use one bigger loan to pay off multiple smaller debts. This is usually done via a consolidation loan or a balance transfer card. Both have strict requirements, and qualifying for one can be tough if your credit is bad . Debt consolidation is a good option because it can dramatically reduce what you will pay in interest and save you money on late fees if you regularly miss payments.

Wondering how it works? Click here .

Here are a few options available if you choose to go the debt consolidation route:

Traditional Debt Consolidation Loan

This is basically just a personal loan that you take out to pay off your other debts. Ideally, the interest rate would be lower than what you currently pay. Add up all your credit card balances and debts you want to consolidate. Then apply for that amount. The amount you’re approved for will be based on your total debt due, credit score, etc. All of this will also be used to determine what interest rate you will be charged.

Looking for a debt consolidation loan? Here are our top picks .

Balance Transfer Credit Card

Credit card refinancing can be a relatively quick and inexpensive way to tackle your debt. Look for credit cards that offer a 0% interest rate on balance transfers for a set amount of time. This is the best option if you are ready to pay down your debt aggressively. Make sure you can pay off your transfer amount within the grace period.


Because while you will not have to pay credit card interest charges during the grace period, those interest charges can still accumulate (it will depend on the terms of your contract). Once the grace period is over, the accumulated interest charges get tacked onto your total amount due. Your new total is subject to whatever interest rate is stated in your contract.

There are a couple of drawbacks: The credit card issuer will charge a balance transfer fee that usually averages between 3% to 5% of the amount transferred, so you’ll need to make some calculations to figure out whether savings will offset the fee. Also, you’ll need to have good credit to qualify for a new credit card.

Best Credit Cards With a 0% APR Offer

Interested in balance transfer credit cards? Check out our list of top picks to find other options.

Using a Traditional Personal Loan for Debt Consolidation

Traditionally, a personal loan is obtained from a bank, but you can also use personal loans for debt consolidation . Like debt consolidation loans, your approval and interest rate will depend on your credit score, income, etc.

Taking out the first loan you qualify for can be tempting. Resist this urge! Take some time to shop around to ensure you get the best options. For example, credit unions often have better rates than traditional banks.

Peer-to-Peer Loan

P2P loans are a great option when you need to take out a loan, but your credit is bad. Instead of asking a bank or a credit union for approval, you will submit your application to individual lenders or investors . It is usually easier to be approved for a P2P loan, though many of them carry larger interest rates and steeper fees than traditional personal loans.

Home Equity Loan or Line of Credit

If you own your own home, you can borrow against the amount of equity you’ve built up to help pay off your debts.

“Equity” is calculated by comparing the amount you would get if you sold your house today for its fair market value and how much you still owe on your mortgage loan. However, the much you’ve built up in equity will serve as your credit or borrowing limit.

You will use the loan to borrow one lump sum that you then use to pay off your other creditors. This will require some discipline tomake sure that once the money hits your bank account, it immediately goes toward paying off your debt. If the money gets spent on other expenses and you’re left with a large amount of credit card debt and no home equity, you could end up putting your home at risk.

4. Debt Settlement

Debt settlement is when a lender agrees to “settle” a borrower’s debt for less than the due amount. Typically, lenders only agree to this if they believe that they won’t be able to get more from you via other methods (collections, etc.).

There are for-profit companies out there that will act as a sort of “middleman” between borrowers and creditors. They negotiate with creditors on the behalf of borrowers and try to get them the best deals possible. If this sounds like it is too good to be true, that’s because it almost is.

Debt settlement companies can be quite helpful but also have many drawbacks. The biggest is that they require their clients to stop making payments on their debts during the negotiation process. Doing this causes the borrower to deal with the following:

  • Damage to their credit because of the missed payments
  • Penalty payments and interest charges continue to accrue during the non-payment period, increasing the amount the borrower owes

Debt settlements stay on credit reports for seven years (or more depending on where you live).

On top of that damage, there is no guarantee that the debt negotiator will be successful.

And, if that isn’t enough, the amount that gets forgiven is considered “taxable income” for the borrower, which can wreak havoc in multiple areas of their lives.

Overall, in some cases, debt settlement can be a viable option for consumers. If you’re interested in learning more, click here .

WARNING: Watch Out For Scams

When you’re struggling to make ends meet, it’s natural to feel desperate or panicked. There are a lot of scammers out there just waiting for the chance to take advantage of you when you feel like that.

Debt settlement plans are especially tempting for predators to make money off desperate people. To make sure that you don’t get taken advantage of, stay away from any debt settlement provider who does any of the following:

  • Asks you to pay them before they start settling your debt (this is illegal)
  • Promises that they will be able to settle your debt(s)
  • Doesn’t explain or waves off any of the risks involved with using their services
  • Promises you anything that sounds even remotely too good to be true.

It is also important that you take the time to thoroughly vet any debt settlement provider you’re considering hiring. Look them up with the FTC, the BBB, and your local consumer protection agencies. It doesn’t take much time to do this, and it can save you a lot of time, money, and heartache.

Check out these top picks if you’re looking for a reputable debt settlement company and dealing with payday loan debt.

5. Bankruptcy

This is the nuclear option. Bankruptcy has a terrible reputation that it only kind of deserves. It is something you certainly want to avoid, but if you’re in over your head, with no other way out, it can also be a real lifesaver. If your credit score is real bad, in the 400’s, in could potentially even raise your credit score.

There are two types of bankruptcy that you can use to get a fresh start — and remember to be wary of costs .

Chapter 7 Bankruptcy

AKA “liquidation bankruptcy.” Chapter 7 bankruptcy requires the petitioner to sell off all their non-essential assets and use the sales proceeds to pay off (or down) their unsecured debts. If the proceeds from the sale don’t pay off all the debt, whatever is left over is written off by the court.

Important note: Chapter 7 is only available to people who make less than $84,952 per year in net income.

Chapter 13 Bankruptcy

If you net more than $84,952 a year in income, you might not qualify for Chapter 7 bankruptcy. In those cases, Chapter 13 is the way to go.

Chapter 13 gives petitioners 3-5 years to “work off” their debt. In this case, “working off” means using whatever money you have that doesn’t go toward absolute essentials (rent, food, that kind of thing) is used to pay off your debts. At the end of the repayment period, whatever is left over is written off.

Chapter 13 won’t save you as much money as Chapter 7 does, but it also looks better on your credit and has less of an effect on your credit score.

Bankruptcy is not a decision to be made lightly. If you’re considering this, be sure to consult a bankruptcy attorney . Many offer a free initial consultation and can advise you on filing types and fees.

Before You Take Action

Don’t just jump on the first debt reduction method that feels good. Take your time and make sure that whatever method you choose, it’s the best one. Here are steps to help you do that.

1. Evaluate Your Financial Situation

Before you can figure out how to tackle your debt, you must understand how much you are already spending. Track every penny you spend for at least a month.

You can use whatever method you want for your tracking. Jot expenses (itemized, of course) down in a notebook, create a spreadsheet or even use an app like Mint or TrueBill. Just make sure that you can easily understand what you have coming in and where it’s going as it goes out.

2. Set a Debt Payment Goal

Make a goal based on how much credit card debt you want to pay off and in what time frame. Then, create a personal budget that opens up some extra cash so you can reach that goal. The budget should be realistic enough to follow without unnecessary stress or detracting from your quality of life.

If you have multiple credit cards, list each one. Rank them in the order you want to repay them. This could be based on interest, the current balance, a low introductory APR, or anything else. Focus on one debt at a time to avoid getting overwhelmed.

For example, say you want to repay $500 in three months. That’s roughly $166 a month, not including interest. Once you’ve paid it off, move on to the next credit card.

You know yourself best. What will be the most motivating for you—the debt avalanche approach? Or do you need the motivation of the debt snowball? Choose one and organize your debts accordingly.

3. Free Up Cash With a Budget

Once you know exactly where your money is going, it will be much easier to reconfigure your spending into a budget. Here are some ways that you can do that.

4. Cut Nonessential Spending

Nobody is going to tell you that you can’t pay off your debts and have fun at the same time. You absolutely can! You just must be more careful about where you find your entertainment. You can get books, movies, even music from your local library. Your local park might have a free movie night. Instead of spending money on stuff you don’t need, find what you want for free and then put the money you would have spent on it toward your debt.

5. Start an Emergency Fund (If Possible)

After you set money aside for your monthly necessities like your rent, utilities , and food, you should start tucking money away in a savings account to help build up an emergency fund. You don’t have to set much aside, especially while you’re trying to pay off your debts. Still, every little bit helps.

6. Work Methodically Toward Bigger Wins

People often forget about the big picture when it comes to finances and paying off credit card debt. However, even small wins like following a personal budget for a month or paying more than the minimum balance on a credit card add up.

Don’t worry if you make a minor financial mistake. Instead, focus on making small but regular steps towards bigger goals. Make all minimum payments on time, decrease spending where you can, and build up some savings. If your living expenses are still too high, consider getting a roommate to help out.

Remember, every positive step counts towards your repayment goal.

7. Lastly, Be Realistic

As mentioned above, there is no reason you can’t work toward paying off your debt and still manage to have fun. In fact, you must do this. If you cut too much of your spending and deny yourself too much, you’re more likely to “binge spend” and undo all your hard work. Instead, set aside a small amount of money every month for impulse purchases or something fun just because you want it.

The Bottom Line

Spending is easy. Repaying debt is hard . Still, there are ways that you can do it and even save money while you do! Use the methods mentioned here to help yourself do exactly that.


What Happens if I Stop Paying My Credit Card Bills?

Your credit score will tank, your credit history will look bad, and you’ll have a hard time doing much of anything that requires credit for a long time. A good credit score will help you qualify for the best interest rates, get a new cell phone , rent an apartment and could even come into play when you’re looking for a new job.
In addition, though you will not go to jail for defaulting on debt payments, a lender or credit card issuer could turn you over to a collections agency or could sue you , and you could end up having your wages garnished .

How Does Debt Reduction Affect My Credit Score?

As you pay your debts down, your credit score will go up. This is because your credit utilization ratio will decrease and you’ll have fewer late payments marring your credit score. One late credit card payment will stay on your credit report for up to seven years.

What Should I Do if the Debt Collector is Harassing Me?

The FTC has a lot of tips to help you if you are being harassed . In the short term, tell them you are contacting your lawyer. This will scare off the scammers.

How Can I Check My Credit Report?

You can obtain a copy of your credit report from all three credit bureaus — Experian, Equifax, and TransUnion — from Or, you can get it from the bureaus directly.

What Does It Mean to Have Good Credit?

Your FICO credit score ranges from 300 to 850, so a good credit score is 670 to 739. With good credit, you can qualify for more loan products and credit cards with lower interest rates and better terms. Good credit also gives you access to higher limits and increases your approval odds for apartment leases and certain jobs. If you don’t know your credit score, here are free ways to learn your number.

Can I Go to Jail for Not Repaying My Credit Card Debt?

No . Your debt collectors cannot take you to criminal court, but they can take you to civil court. This could mean garnished wages and damaged credit. However, it will not result in jail time. However, it is possible to end up in jail for another reason, like ignoring a judge’s order.

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