5 steps to get out of credit card debt

Credit cards make it easy to overspend. You may think you’ll be able to pay off what you charged with your next paycheck, but unexpected expenses often get in the way. And it doesn’t help your brain is working against you. Shopping releases the feel-good chemical known as dopamine, especially when purchasing on-sale items. Our brains crave the dopamine release, making it hard to say “no.” What you’re left with is ever-increasing credit card bills and little to no money to pay them off. 

If you want to get off the hamster wheel, take control of your spending and get out of credit card debt — for good — here are five steps to take toward financial freedom. 

Step 1: Go back to budgeting basics

If you think budgets are no fun, it’s worth taking a look at the variety of budgeting methods available. Find the right fit, and you’ll wonder how you ever lived without it. Here are some of the most popular budgeting methods to get you started:

50/30/20 budget

How it works: Split your income so 50% goes toward essential expenses (rent, utilities, groceries, etc.), 30% toward your wants (dining, gifts, vacations, etc.) and 20% toward savings and debt repayment. 

Best for: People who only want general budgeting guidelines to make sure all the bases are covered. 

Apps that can help: MintWally 

Zero-based budget

How it works: Take your income and assign each dollar to an expense until all your money is accounted for. Then spend and save according to the set amounts for each category.  

Best for: People with tight budgets who need every dollar to count.

Apps that can help: YNABEveryDollar

Envelope system

How it works: Separate cash into labeled envelopes for all your expenses and take from the appropriate category when making purchases. No more money in the envelope means either no more spending or sacrificing other categories, such as “dining out.”

Best for: People who tend to keep going over budget. 

Apps that can help: GoodbudgetSimpleBudget

Pay yourself first

How it works: Schedule a bill payment from your bank account to your credit card on every payday. Then use the leftover money for the rest of your budget. 

Best for: People who feel like they never have enough money left over to make a dent in bills.

Apps that can help: PocketGuard, Your bank’s app

Step 2: Deep dive into your expenses

You might realize with budgeting that you don’t have as much money as you thought to tackle your credit card bills with gusto. It could be your essential expenses, like rent, groceries, utility bills and minimum card payments, are too high for your income. But more than likely, there are leaks in your budget or room for improvement. 

To find the money-wasters or to see where you can do better, ask yourself: 

  • What can I eliminate without much heartache?
  • Does this expense have cheaper alternatives?
  • Where can I lower my budget?
  • Is there anything I’m willing to forego now to reach my goal of financial freedom faster?
  • What subscription services don’t I use? Are free alternatives available at my local library? 

Depending on how ambitious your goals are, you might be willing to do away with much of your non-essential spending. But no one is saying you have to eat ramen noodles for a year to be debt-free, if that’s not what you want. Instead, your expenses are personal and unique to you. Analyze your priorities and make the sacrifices that feel right for your situation.

For example, you may find packing lunch instead of eating out is an easy and healthy swap that frees up hundreds of dollars every month. Or maybe you wouldn’t mind shopping at a more budget-friendly grocery store to save on groceries. Some other money-saving ideas include:

  • Reduce (or skip altogether) money spent on drinks
  • Stick to one streaming service for entertainment, such as Amazon’s Prime Videosince it’s free for prime members
  • Cut the cable cord
  • Carpool to save on gas and auto insurance premiums
  • Downgrade your internet plan or change service providers
  • Buy an older, but reliable, car to save on car payments or get rid of lease payments
  • Walk or bike to destinations
  • Go meatless for meals a few times a week
  • Shop at outlets for clothes
  • Exercise outdoors instead of at the gym

And even if you can’t cut back any expenses, there may be alternative ways for you to bring in more money, such as finding a part-time job, freelancing on the side, selling items online or getting a roommate. 

Step 3: Attack your credit cards one at a time

Now that you have a clear picture of your financial standing and your available cash, it’s time to put pen to paper and get the ball rolling on paying off your credit cards. Here’s how the process works: 

  1. Make a list of all the credit cards with a balance, and order them from least to greatest. For each card, note the interest rate and minimum monthly payment. 
  2. Call each credit card company and try to negotiate a lower monthly payment or APR.
  3. Round up the extra cash you were able to squeeze out of your budget and combine it with what you saved by calling the credit card companies. 
  4. Take that money and apply it to the card with the lowest balance. Keep making the minimum payments on all other credit cards. 
  5. Once you fully pay off the card, move on to the second one with the lowest balance. Maintain or increase the same monthly payment from the previous card.
  6. Repeat until you pay off all credit cards. 

Why start by paying off the credit card with the smallest debt first instead of the one with the higher interest rate? With every card you pay off, your progress and quick wins will propel you forward so that you see the process through to the end. 

And while you’re paying off your credit cards, keep it simple and stick to using just one card for everyday purchases. It’s easier than tracking multiple cards and helps curb spending. Choose the one with rewards you love the most. 

Credit cards like the Capital One Quicksilver earn an unlimited 1.5% cash back on every purchase, and is one of the best rewards credit cards for people who love simplicity. If your credit score has taken a hit, credit cards for bad credit, like the Discover it® Secured, can still earn you 1% to 2% cash back on purchases and help you rebuild your credit history. 

But, avoid sabotaging your progress by making charges you can’t fully pay off at the end of the month or that weren’t in your budget. And once the card you’re funneling money into reaches $0, leave that card in the drawer and forget about it. That way, you won’t be tempted to use it and derail your efforts.

Step 4: Consider a balance transfer credit card for bigger balances

It’ll feel great to keep knocking off smaller credit card balances, but the more significant balances might slow you down and prove to be a hard slog. A credit card with an enticing balance transfer offer can keep your motivation from waning. 

It seems counterintuitive to open up yet another credit card when you’re trying to get rid of credit card debt, but what keeps people enslaved to debt are the interest rates. Some of the best balance transfer cards offer 0% intro APRs on balance transfers with no balance transfer fees, such as:

As an example of the difference a balance transfer credit card makes, let’s look at a travel credit card with a $3,000 balance and an average APR of 20.4%. Chase Slate has a 0% intro APR on balance transfers for 15 months (16.49% to 25.24% variable APR afterward), no balance transfer fees during the promotional period and no annual fees. If you open an account and move your balance over, you’ll save an impressive $765 over the introductory period. 

When searching for cards, be aware of balance transfer fees. Some low-interest credit cards like the Discover it® Cash Back card have great standard variable APR rates of 13.49% to 24.49% and a 0% intro APR on purchases and balance transfers for the first 14 months. However, there’s a 3% intro balance transfer fee and a 5% future balance transfer fee. 

Step 5: Take it up with the pros, if needed

If the debt on your personal and business credit cards and other sources is too high of a mountain for you to climb on your own, there are a few avenues you can pursue to provide relief.

Debt management plan

What it is: A credit counseling agency negotiates with creditors on your behalf for better interest rates and payment plans. 

Pros: Programs are structured to last three to five years, and pay off the entire debt within that timeframe; nonprofits offer free credit counseling

Cons: Up-front fees and monthly maintenance fees for services

How to get started: Contact a credit counseling agency in your area or a nonprofit like NFCC

Debt consolidation

What it is: A company works with creditors on your behalf to roll all credit card payments into a single, and often lower-interest, amount. 

Pros: Easy to keep track of bills; more manageable monthly payments

Cons: Extended repayment terms can mean paying more in interest in the long run

How to get started: Contact a bank, credit union or online lender

Debt settlement

What it is: A company works to negotiate with creditors for you to pay less than you owe on your credit card bill. 

Pros: May help avoid bankruptcy; less overall debt

Cons: Fees can be as high as 25% of total debt being settled; must have history of missing payments to qualify

How to get started: Contact a local or online debt settlement company. 

*The Consumer Financial Protection Bureau advises consumers to contact their state attorney general and local consumer protection agency to check for complaints on file before hiring a debt settlement company to reduce the risk of scams. 


What it is: A court proceeding that analyzes your assets and liabilities to determine your ability to repay your debt. If it’s found you cannot repay, you declare bankruptcy.

Pros: Stops home foreclosures, wage garnishments and property repossessions

Cons: Stays on your credit report for 10 or more years; does not discharge every type of debt

How to get started: You can file for Chapter 7 bankruptcy by yourself in straightforward cases, but it’s generally recommended to work with a local attorney. 

Financial freedom is closer than you think

No matter how suffocating your credit card debt feels, having good budgeting habits and systematically paying off your credit card will get you closer to the finish line. And as long as you stick with it and continue making progress, you can reach the financial peace you crave. 

Lorraine Roberte

Personal finance writer

Lorraine is a South Florida based personal finance and digital marketing freelance writer who drafts content for businesses and startups.