ways to reduce credit card debt

6 Easy Ways to Reduce Your Credit Card Debt

If you own a credit card, there is a 65% chance you are a paying member of the “revolvers” club. As cool as the name may sound, this is not a club you want to be part of. According to a 2015 study published by the Federal Reserve Bank of Boston, only 35% of credit card users are “convenience users.” These are consumers who pay their credit card balance in full every month and have $0 credit card debt. Revolvers, on the other hand, have an average credit card debt of $15,700. As a group they have a total credit card debt of $953.3 million (as of May 2016).

If you are a “revolver,” what can you do to become a “convenience user?” Yeah, I know. We need to do something about the club’s name.

Here are 6 easy ways to reduce your credit card debt.

Pay Two Minimum Payments a Month

Having specific goals and staying consistent is the key to all successful debt reduction plans. Let’s say you’re an average revolver. In other words, you owe $15,000 in credit card debt and you have a 15% APR. Your minimum payment would be a whopping $600 a month. Sorry, but it will take you 13 years and 7 months to repay it.

Pay double your current minimum payment, $1,200, and stick with it. Congratulations. You will pay your debt in just 1 year and 2 months and you’ll save $5,311.43 in interest payments.

Transfer Your Debt to a 0% APR Credit Card

Consider switching your credit card debt to a 0% APR balance transfer card. If you have $15,000 in debt and an average 15% APR, you could save $1,940 in interest during just 12 months of 0% APR. Combine a 0% APR balance transfer with an aggressive repayment plan, and you could repay your entire credit card debt in less than a year.

Remember balance transfers are not always free. The APR may be 0% but APRs don’t include balance transfer fees, which can be as high as 5%. There are balance transfer credit cards, such as Slate, that don’t charge transfer fees, but these are rare. This doesn’t mean you shouldn’t transfer your credit balance. Just make sure you take into account these fees when calculating the pros and cons of a balance transfer.

Pay the Credit Card with the Highest Interest Rate First

Write down the interest rate of every credit card account with a balance. Identify the account with the highest APR. Make minimum payments on all the other accounts and sink pour every dollar you can spare into paying the account with the highest APR. This method is called the debt avalanche method. If you don’t qualify for a 0% APR balance transfer card, this is the fastest way to reduce your credit debt.

Let’s say you have three credit card accounts:

Card #1 has a balance of $5,000 and a 13% APR
Card #2 has a balance of $8,000 and a 20% APR
Card #3 has a balance of $2,000 and a 12% APR

If you can afford to make $800 in monthly payments and follow the debt avalanche method, you will pay $2,226.38 in interest and be debt-free in 1 year and 11 months.

Debt Snowball Method

Another method is to start pay as much as you can on your smallest debt while making minimum payments on the other ones. Once it’s paid, go on to then next smallest debt until you are debt free. This method was popularized by David Ramsey and is called the debt snowball method. It has the advantage of providing quick wins, which encourages the change in behavior required to stick with a debt repayment plan.

How does the debt snowball method perform?

Using the same example above, you would pay $2,785.61 in interest and take 2 years to be debt-free. In other words, “revolvers” who use the debt snowball method to pay off their debt will pay an additional $559 in interest and take a month more to be debt free than those who start with the highest-interest accounts.

Although the debt avalanche method is clearly the rational way to pay off debt, humans are not always that rational. A study by a team of Kellogg School researchers found that people with large credit card balances are more likely to pay down their entire debt when they follow the debt snowball method. Yep. As any casino manager will tell you, the lure of small wins is powerful. And yes, casino gamblers are generally not good at math either.

Really, it doesn’t matter which method you use, as long as you stick with your payments until you are debt-free. Sure. $559 in extra interest is a chunk of change, but it’s less than a single month of credit card payments. Just $26.14 more a month when spread over the entire loan term.

Request an APR Reduction

You may think it’s unlikely that a credit card company will voluntarily reduce their APR, but it’s far from rare. In fact, if your credit score is good, your chances of scoring a rate reduction are excellent. The credit card industry is a competitive market and credit card companies know it is much more expensive to lure a new client than to keep a good client happy.

This is how you do it:

  1. Find out what your credit score is. Check for free at SuperMoney’s offer engine
  2. Gather the following data about your credit card account: how long you’ve owned the card, your credit card limit, how much you owe on the card, and how many times you’ve made a late payment.
  3. Estimate the best APR you are likely to qualify for. Be realistic.
  4. Call your credit card company and follow this script by filling the blanks with your data.

Hi, my name is __________. I have been a loyal customer for ___ years and I haven’t made a late payment in the last __ months (or ever). I have an excellent/good/fair credit score and I receive several offers in the mail for other credit cards. I need a lower APR or I will cancel my card and transfer my balance to another company.

If the operator refuses to lower your rate, ask to speak to a supervisor and repeat. You may be surprised by how much money a 5-minute call can save you.

For example, if you owe $15,000 in credit card debt, you make monthly payments of $800, and your APR is 20%, you will pay $3,136.19 in interest. Reduce your interest rate to 15% APR, the national average in 2016 and you will save $936.33 in interest and pay off your debt a month earlier.

Nuclear Threat Option: Debt Settlement

All the previous debt reduction methods assume you either had decent credit or you can afford to make more than the minimum payments on your debts. But what if your credit is not great and you can’t afford to make minimum payments?

In that case, you may need to go straight to DEFCON 2 and negotiate a debt settlement with your credit card company. In case you were wondering, DEFCON 1 is bankruptcy. Credit card companies are very aware of two facts:

  • Bankruptcy is always an option for consumers overwhelmed by crushing debt
  • Unsecured loans, such as credit card debt, can be discharged (removed) with bankruptcy

Negotiating a settlement with your credit card company requires you to stop making minimum payments. Instead, deposit all you can afford into a settlement account. Consider this account as a war chest with which to negotiate a reduction on your debt balance. If you continue making minimum payments, the credit card company has no incentive to grant you a settlement. Credit card companies have no problem with debtors taking years, if not decades, to repay their loans. Of course, failing to make minimum payments and negotiating a settlement will most likely hurt your credit.

Although you can negotiate a settlement by yourself, many find a professional debt relief companies provide better results. Debt relief firms understand the protocols used by credit card companies and what requirements a debtor must meet to qualify for debt reduction. These companies do charge for their services, but fees are only due once an account is settled and they are paid from the savings generated by the settlement. Click here for a free consultation with a debt relief specialist.

Click here for a detailed guide on how to pay off credit card debt.


  • If you carry a revolving balance on your credit card, don’t feel bad. You are certainly not alone. About 65% of credit card users are revolvers.
  • If your budget allows it, make larger monthly payments on your credit card debt. And for heaven’s sake, start with the account with the highest interest rate.
  • If your credit is good, ask for a rate reduction.
  • If you can barely afford to make minimum payments, consider negotiating a settlement with your credit card company.

Regardless of what method you decide to choose to pay off your credit card debt, stop looking for excuses. Start now and stick with it.