How to pay off credit card debt

Establish your foundation

Before you can successfully pay down debt, you must first stop adding to it. These foundational steps ensure you fix the root problem and protect yourself against future financial setbacks.

1. List every balance with APR, minimum payment, and due date.
2. Automate all minimum payments to protect your credit score and avoid late fees.
3. Choose a framework:
   • Avalanche (cost-optimal): pay extra to the highest APR first.
   • Snowball (behavioral): pay extra to the smallest balance first to build momentum.
4. Find dollars for the “extra” payment: trim 2–3 recurring expenses; redirect windfalls (tax refund, bonus).
5. Call your issuers: ask for a temporary APR reduction or a hardship plan (sample script below).
6. Decide on tools (optional): balance transfer or consolidation loan if they reduce total interest and you won’t rerun balances.
7. Track weekly: watch total balance, utilization (<30% target per card), and on-time payments.

Example script to lower APR: “I’ve been a customer for X years. I’ve automated on-time payments, and I’m working on a payoff plan. Can you review my account for a lower APR or a hardship program for 6–12 months?”

Stop the cycle and address the root cause

The single most important step is identifying why you accumulated the debt.

Was it due to unexpected job loss or medical expenses, or was it a result of sustained overspending?

If you do not address the behavioral or structural issue that caused the debt, you risk repeating the cycle. Commit to cutting up the credit cards (after paying them off with a loan, if applicable) or strictly limiting their use immediately.

Create a debt-focused budget

You need to find the money to pay more than the minimum. This requires a dedicated, temporary budget. Try a zero-based budget, where every dollar of income is assigned a job (savings, bill, debt payment).

Look for areas to cut back immediately, such as dining out, entertainment subscriptions and non-essential shopping, to free up the maximum amount of cash to dedicate toward debt repayment.

Build a starter emergency fund

Before you throw every extra dollar at the debt, prioritize saving a small, starter emergency fund (often $1,000).

The purpose of this fund is to handle small, unexpected expenses (like a flat tire or a vet visit) without resorting to using a credit card again.

This fund acts as a vital shield, protecting your debt repayment momentum.

Choose a debt payment strategy that works for you

Once you have control over your spending and a safety buffer, you can select the strategy that works for your situation.

It all comes down to one core idea: balance. After all, the best kind of debt strategy is the one that works for your life.

Paying more than the minimum

All credit cards come with a minimum monthly payment that you’ll need to pay every month. The first and most effective way to pay down any existing credit card debt is to pay more than the minimum monthly payment because any balance incurs interest.

Paying a higher amount monthly means paying down your principal faster. This can result in less interest over the course of the loan and a faster repayment timeline overall.

Snowball method (Focus on Momentum)

This strategy focuses on paying down small debts first and then building momentum to tackle larger debts.

1. Pay the minimum on all accounts except the one with the smallest balance.
2. Aggressively pay down the smallest balance.
3. Once the smallest debt is paid off, roll the money you were spending on it into the payment for the next-smallest debt, building a powerful "snowball."

This method is ideal for those who need quick wins and psychological motivation to stay focused.

High-interest paydown (“avalanche method,” focus on savings)

All debts have different interest rates. With this strategy, you focus on paying down the debts with the highest interest rates first.

1. Pay the minimum on all accounts except the one with the highest APR.
2. Aggressively pay down the highest APR balance.
3. Once the highest APR debt is paid off, move to the next-highest APR debt.

This method will save you the greatest amount of money in the long run by lowering how much you’ll pay over the life of the loans. However, it can be hard to build and keep momentum if your debts with the highest interest rates are also the ones with the largest balances.

Consolidation and advanced tools

These strategies involve using one large financial product to pay off multiple smaller, higher-interest debts.

Consolidating with a personal installment loan

If you’re struggling with paying off several cards with high interest rates, you may want to consider debt consolidation with a personal loan.

The Benefit: Consolidating your debts bundles them under one account. While you’ll still owe the same total amount, a personal loan is an installment loan. This means it has a fixed interest rate, a fixed monthly payment and a defined end date, providing crucial discipline and certainty, unlike the revolving nature of credit cards.

Action Item: You may opt to close or freeze the credit cards you paid off, making it easier for you to resist spending more money on them and accruing new debt.

Finding the right balance between your short-term goals and your long-term financial health is not something you need to tackle on your own. You can meet with your local banker.

See if you qualify for a balance transfer card (0% intro APR)

Balance transfers offer the opportunity for a 0% introductory APR, typically for between six months and two years, allowing you to pay down a significant amount of the principal during this promotional period.

Since all your payments will go directly against the amount you owe (not the interest), you’ll make faster progress.

Critical warning (The "balance transfer cliff"): Note that most balance transfer cards require a relatively high credit score and many will charge a balance transfer fee (around 3% to 5% of the transferred amount).

More critically, the 0% APR is temporary.

You must pay off the entire balance before the promotional period expires. If you fail to do so, the remaining balance will be charged the standard, often very high, variable interest rate moving forward, potentially eliminating any savings you gained. Treat the deadline as absolute.

Benefits of paying off debt with a home equity line of credit (HELOC)

A specific strategy often used by homeowners is tapping into their home’s equity with a HELOC to pay down the debt.

This method centers on paying off the credit card debt with the HELOC, leaving you with the same outstanding balance but a lower monthly payment and interest rate.

A HELOC lets you borrow against the equity you have in your home. This means individuals who may not qualify outright for a personal loan can leverage their home’s equity to pay off high-interest debt, such as a credit card balance.

Let’s say your house is valued at $400,000 and you have an outstanding mortgage of $150,000. This would mean you have $250,000 worth of equity in your home. With a home equity line of credit, you could borrow against this equity (generally up to 85% of the total amount) to pay off your credit card debt, leaving you with a more manageable loan at a lower interest rate.

Plus, the increased borrowing capacity means you can consolidate other debt into your HELOC. For instance, you could consolidate any loans, medical bills or other balances that have higher interest rates (or larger monthly payments) than you could expect from your HELOC.

Alternative debt relief options

If your interest rates are too high or the amount you owe is more than the amount you can reasonably pay each month, professional help may be necessary.

Non-profit credit counseling and debt management plans (DMPs)

Non-profit credit counseling agencies offer professional budgeting help and, crucially, structured Debt Management Plans (DMPs). With a DMP, the agency negotiates with your creditors (credit card companies) to lower your interest rates (often significantly) and sometimes waive fees.

You then make one single monthly payment to the agency, and they distribute the funds to your creditors. This is a powerful, regulated option that avoids taking out a new loan.

Credit score boost: focus on credit utilization

Remember that paying down debt has an immediate and measurable benefit on your credit score by improving your Credit Utilization Ratio (CUR). Your CUR is the amount of credit you are using divided by the total credit available to you (e.g., $5,000 balance/$10,000 limit = 50% CUR).

Experts recommend keeping your CUR below 30%, and ideally below 10%. As you reduce your balances, your CUR drops, which is one of the fastest ways to boost your credit score.

Debt settlement or bankruptcy (last resorts)

For extreme cases, two final options exist, which should only be pursued after consulting with a professional:

• Debt Settlement: A third-party company negotiates with creditors to pay off a lump sum that is less than the total amount owed. This severely damages your credit and often results in the forgiven portion of the debt being counted as taxable income by the IRS.
• Bankruptcy: A legal process that allows you to eliminate (Chapter 7) or restructure (Chapter 13) your debts. This has the most devastating and long-lasting impact on your credit but offers a complete financial fresh start when all other options have been exhausted.

Quick decision recommendations

• Want the lowest total interest and you’re disciplined? Avalanche.
• Need early wins to stay engaged? Snowball.
• APR > 20% across multiple cards and good credit? Consider a 0% transfer if you can clear most of the balance before promo ends.
• Multiple high-APR cards and steady income? Price a fixed-rate consolidation loan; keep the term short enough to save interest.
• Homeowner considering HELOC? Proceed only if a written budget shows you’ll not reuse cards and you understand the home-collateral risk.

Take advantage of resources at your local branch

Paying down your credit card debt is a marathon, not a sprint, so it’s important to choose a strategy that will work for your financial situation for as long as it takes to eliminate your debt.

Finding the right balance between your short-term goals and your long-term financial health is not something you need to tackle on your own.

Schedule an appointment to meet with a dedicated financial expert at an Associated Bank near you. Together you can choose a strategy that works for you to tackle your credit card debt. You’ve got this. We’ve got you.

Commonly asked questions about paying off credit card debt

Should I close paid-off cards?

Usually no. Keeping older accounts open helps credit history length and available credit (which lowers utilization).

How much should I keep as an emergency buffer?

Aim for $500–$1,000 while paying debt; rebuild to 3–6 months once high-interest debt is gone.

Which bills should I pay first if cash is tight?

Housing, utilities, food, transportation, then minimums on all debts; any extra goes to your chosen target card.

Should I use my 401(k) to pay off credit card debt?

Short answer: usually no. Tapping retirement money often creates taxes and penalties, sacrifices long-term compounding, and gives up one of the strongest legal protections you have (ERISA’s creditor protection) while you convert unsecured debt into retirement shortfall risk.

What is a step-by-step guide to paying off credit card debt?

These steps will vary based on your own personal situation. Generally, this 30-day plan will provide a useful guide on where to start and what to do next:

• Day 1–2: Inventory debts; automate minimums; pick avalanche or snowball.
• Day 3–7: Call issuers; set up rate reductions or hardship if available.
• Day 8–10: Build a micro-budget to free $150–$300/month for the extra payment.
• Day 11–15: If using a tool, complete application(s) and schedule payoff transfers.
• Day 16–30: Make the first “extra” payment; set weekly check-ins; track a simple scorecard: balances down, utilization down, on-time = 100%.