How to get out of credit card debt

It takes time and determination to conquer a mountain of debt.

But if you’re equipped with the right knowledge and tools, the journey to conquering that mountain can be relatively smooth. Plus, you don’t have to tackle that mountain of debt alone — credit counselors are available to help.

Of course, no two attempts to conquer debt are the same — a debt reduction plan that works for one person may not work for another. And unless you stick to your plan, you’ll likely have a tough time chipping away at your debt.

If you’re not sure how to tackle your credit card debt, we’ve got some advice on steps you can take. While this advice won’t guarantee success, it can help point you in the right direction.

How to get out of credit card debt

1. Evaluate your finances
2. Prioritize your spending
3. Create a budget
4. Free up money
5. Set a strategy
6. Seek help (if you need it)
7. Work on your financial habits

1. Evaluate your finances

A good first step toward getting out of credit card debt is to assess your financial situation.

Create a list of everything you owe, including credit card debt and all other monthly bills. This review of your overall debt should include the balance and the annual percentage rate, or APR — the price you’re charged to borrow money — for each credit card.

Looking at each card’s balance and APR will help you decide how to approach reducing your debt. In some cases, you might want to tackle debt with the highest interest rates first to save money on interest charges; in other cases, you might want to give yourself a psychological edge by paying off lower-balance cards first.

Next, compare your debt and expenses with your income. You should consider items such as rent or mortgage debt, credit card balances, loan debt and grocery bills.

As for your income, take into account your salary, the interest earned on your savings and anything else that generates money.

2. Prioritize your spending

When mapping out how to get rid of credit card debt, be sure to cover the basics first, says Sean Fox, co-president and CRO of Freedom Financial Network, a financial services company that specializes in debt settlement. Those basics include food, housing and clothing.

Then, Fox says, be sure to pay at least the minimum amount on secured debts. This type of debt is secured by an asset (sometimes referred to as “collateral”), such as a car or home. If you fail to make timely payments on secured debt, you could lose the asset that’s backing the loan, he warns.

Next, tackle your credit card debt. Credit Karma’s Debt Repayment Calculator is a great way to get started and stay on track. Just enter in the balance you owe and the interest rate, and then enter your expected monthly payment or desired payoff time frame to get an idea of how long it will take to tackle that debt.

Also, focus on student loan debt, Fox says. Why? Because the federal government, which backs most student loan debt, can punish you financially if you’ve defaulted on the repayment of a student loan. For example, the government can garnish your wages, your tax refunds and your Social Security benefits. If you have a private student loan, the lender can’t go after your wages or Social Security benefits, but it can pursue legal action in court to collect student loan debt.

Consider not using your credit cards while you’re working on cutting your debt. Paying for things with cash or a debit card can ensure that you don’t rack up debt as you’re trying to pay it off, which can be a frustrating experience.

Most importantly, make sure you’re making at least the minimum payments on all of your outstanding debts.

Balance transfer cards: One way to help pay off debt

Rather than pay interest on your credit card debt, you may be able to transfer high-interest debt to a single credit card with a balance transfer.

A number of balance transfer cards allow you to pay an introductory interest rate of 0% on your balance for a set amount of time, so you can pay more money toward your principal and reduce how long it will take to pay off your debt.

Learn how to do a balance transfer in six steps.

3. Create a budget

Once you’ve prioritized your debts, it’s time to establish a budget. A budget will help you track your spending and get a better handle on how to shrink your credit card debt.

Beverly Harzog, credit card expert and author of “The Debt Escape Plan,” says that in paying off more than $20,000 of her own credit card debt, she learned that it takes persistence, self-discipline and “a darned good budget” to get rid of that financial burden.

Online tools such as YNAB (You Need a Budget) can be useful in setting a budget and making sure you don’t stray too far from it each month. If you need additional education on budgeting, check out Credit Karma’s Guide to Budgeting.

Fox says creating a budget will guide your decision about what strategy to use for reducing your credit card debt. (Later, we’ll explain in detail how to pick the right strategy.)

4. Free up money

As you’re sticking to your budget, you might want to investigate ways you can trim expenses and generate more income.

Going without cable TV or canceling your gym membership are just a couple of ways to trim down your expenses. It’s up to you to decide which luxuries you’re willing to give up and which you simply can’t live without.

If you’re itching for some extra income and have some extra time on your hands, give some thought to getting a side job or making money from a hobby, such as designing jewelry. Or perhaps you can volunteer for paid overtime at your full-time job.

And — though it may be tempting — remember to steer that extra income toward your credit card debt instead of spending it.

5. Set a strategy

There are three main strategies for debt reduction: the avalanche method, the snowball method and the blizzard method.

Here’s how each works.

The avalanche method

Fox says that the avalanche method involves paying off your balances with the highest interest rates first. The goal is to erase your debt as quickly and efficiently as possible.

Here’s how it works: Make minimum payments on each of your balances except the one with the highest APR. For the card account with the highest APR, pay the minimum plus any extra you can afford.

“Repeat this process every month until that debt has been paid off,” Fox says. “Then, keep paying the same monthly total, but take every dollar you were using to pay off the highest-interest debt and put that toward paying off the debt with the second-highest interest rate.”

By aggressively paying down your highest interest balances first, you may save hundreds or even thousands on interest charges in the long run. If saving money is your top priority, stick to this strategy until all your credit card debt is gone.

The snowball method

With the snowball method, you pay off the card with the smallest balance first and work up from there, Fox explains. As with the avalanche method, you always make the minimum payments on all your accounts, but then you put any remaining money toward the card with the smallest balance.

After the balance on that card is wiped out, put any extra cash toward the card that now has the smallest balance. This method can help you build the confidence and positive repayment habits you need to eventually conquer all your debt.

The blizzard method

The third debt-repayment strategy is known as the blizzard method. This combines paying off the smallest balance first (snowball) and then paying off the highest-interest balance (avalanche).

“The avalanche saves the most money, but some folks prefer a quick win with the snowball method,” Harzog explains. “The blizzard combines both — you get the emotional boost and then you can save money by using the avalanche.”

Whatever your strategy, paying down credit card debt can help you improve your credit scores. This is because payment history, or how often you make on-time payments toward your credit accounts, is one of the most important factors in determining your credit scores.

6. Seek help (if you need it)

Do you still feel overwhelmed? Then it might be time to seek a credit counseling agency, whose experts can help put you on the right track. A credit counselor will work with you to help improve your financial situation, offering tools and resources to help you gain control over your money.

The Federal Trade Commission suggests finding a credit counseling agency that offers in-person services. Ask friends and relatives for suggestions on which agencies are reputable; your bank is another potential resource.

Once you’ve done your preliminary homework, double check whether the agencies you’re considering are trustworthy by contacting the attorney general’s office in your state or reaching out to your local consumer protection agency.

7. Work on your financial habits

If you don’t alter the behavior that got you into credit card debt in the first place, you might slip back into debt again in the future.

Fox stresses the importance of differentiating between “wants” and “needs.” Do you need food and housing? Definitely. Do you need to pay your bills and set up an emergency fund? Most likely. Fox says these needs should take precedence over wants.

He also stresses the need to stick to the budget you’ve created. If you’re not keeping close track of your income and spending, you may wind up in debt all over again.

Bottom line

Getting out of credit card debt usually doesn’t happen immediately. If it took you a while to rack up the debt, it may take you a while to become debt free.

Just keep in mind that one of the most important things you can do is make consistent, on-time payments every month.