How to Pay Off Your Credit Card Debt (No, Really)

Credit card debt is an all-too common challenge faced by millions of people around the world. In fact, the amount of credit card debt in the U.S. alone has recently reach record-breaking levels. It can seem like an insurmountable obstacle, with high interest rates, minimum payments that barely make a dent, and the ever-present temptation to overspend. However, with the right strategies and a steadfast commitment, it is possible to break free from the shackles of credit card debt and reclaim your financial freedom.

Whether you're just starting to tackle your credit card balances or have been struggling with them for years, this article will provide you with the knowledge and tools needed to take control of your finances and achieve your debt-free goals…

Understand your debt situation

The first step towards conquering credit card debt is to gain a clear understanding of your current financial situation. Think of this first step like a “debt triage.”

Gather all your credit card statements and make a list of the outstanding balances, interest rates, and minimum payments for each account. This information will be crucial in developing an effective debt repayment strategy.
Additionally, review your spending habits and identify areas where you can potentially cut back or eliminate unnecessary expenses. Tracking your spending can help you identify spending leaks and opportunities to redirect those funds towards repaying your debt.

Prioritize your debt

Once you have a high-level view of your credit card debt, it's time to prioritize which accounts to focus on first. The two most popular approaches are the "Snowball Method" and the "Avalanche Method."

The Snowball Method involves paying off your smallest balance first, regardless of the interest rate. This strategy provides quick wins and a sense of momentum, which can be highly motivating. As you pay off each card, you can then redirect the minimum payment you were making towards the next smallest balance, creating a "snowball" effect.
The Avalanche Method, on the other hand, prioritizes paying off the accounts with the highest interest rates first. This approach may take longer to see results, but it can save you more money in the long run by minimizing the amount of interest you pay over time.

Whichever method you choose, the key is to maintain focus and discipline. Stick to your plan and resist the temptation to use your credit cards while you're paying them off.

Negotiate with your creditors

Believe it or not, many creditors are actually willing to work with customers who are struggling to pay off their debt. Consider contacting your credit card companies and requesting a lower interest rate or a hardship program. These options can significantly reduce the amount of interest you pay each month, allowing more of your payment to go towards the principal balance.

Be prepared to explain your financial situation and provide supporting documentation, if necessary. Remember, credit card companies want to recover the money you owe them, so they may be more willing to negotiate than you might think.

Consolidate your debt

Debt consolidation is another effective strategy for managing credit card debt. This involves taking out a new loan, often with a lower interest rate, to pay off multiple credit card balances. By consolidating your debt, you can simplify your payments and potentially lower your interest costs.

There are several options for debt consolidation:

Personal loans are a type of installment loan that allows you to borrow a lump sum of money and pay it back over a fixed period of time, typically 1-7 years, with regular monthly payments. Personal loans are unsecured, meaning they are not backed by collateral like a house or car. The interest rate is based on your creditworthiness.
Balance transfer credit cards are a type of credit card that allows you to transfer an outstanding balance from another credit card onto the new card. The key benefit of a balance transfer is that many issuers offer an introductory 0% APR period on the transferred balance, typically ranging from 12 to 21 months.
Home equity loans are a type of secured loan that allows homeowners to borrow money by using the equity in their home as collateral. Equity is the difference between the current market value of a home and the outstanding balance on the mortgage.

Each option has its own pros and cons, so be sure to research and compare them to find the best fit for your financial situation.

Implement a debt repayment plan

With your debt prioritized and potential consolidation options explored, it's time to create a comprehensive debt repayment plan. This plan should include the following elements:

Determine a reasonable timeline for paying off your debt, considering your available funds and the interest rates you're facing.
Decide how much you can realistically allocate towards debt repayment each month, and then distribute those funds according to your prioritized debt plan.
Set up automatic payments to ensure that you never miss a due date and maintain consistent progress on your debt repayment journey.
Regularly review your plan and make adjustments as needed to account for changes in your financial situation or new opportunities to accelerate your debt repayment.

Stay motivated and celebrate milestones

Paying off credit card debt can be a long and challenging process, so it's essential to stay motivated and celebrate your progress along the way. Create visual reminders of your debt payoff journey, such as a debt thermometer or a countdown calendar, to track your progress and stay focused on your goal.

Additionally, treat yourself to small rewards when you reach significant milestones, such as paying off a card or reaching a certain debt reduction milestone. This will help you maintain a positive mindset and reinforce the progress you're making!

Don’t be afraid to ask for help

If you’re feeling overwhelmed, consider reaching out to JG Wentworth to help you on your debt repayment journey. If you have $10,000 or more in unsecured credit card debt, you just might qualify for our Debt Relief Program.* How it works, in a nutshell:

You make one monthly program payment: We start by working with you to assess your overall debt to determine if you qualify for our program. You then make just one monthly program payment into an account that you control with an insured financial institution.
We negotiate on your behalf: As you accumulate money in your program account, we negotiate with your creditors to settle your debts. The money in your program account goes toward paying off the settled debt amount, plus your program fees.
24/7 support: We keep in touch every step of the way. Whenever there’s an update, we make sure to fill you in so you’re in the loop about your own finances. Our 24/7 online portal allows you to check your progress at your convenience.
We don’t get paid unless we settle your debt: When you enroll your debt in the JG Wentworth Debt Relief Program, we take a fee based on a percentage of the debt that you enroll. We only receive payment if we settle your debt. If we aren’t successful in settling a debt, we don’t make any money – which serves as motivation for our team of negotiators to help you settle as quickly as possible.

Remember, becoming debt-free is not just about the numbers – it’s about regaining control over your financial future and the freedom that comes with it. By staying committed, disciplined, and focused, you can conquer your credit card debt and reclaim your financial independence.

SOURCES

Petras, G., “Graphics show how Americans' total credit card debt reached record high.” USA Today. February 7, 2024.

Leicht, A., “When does a home equity loan make sense?” CBS News. April 16, 2024.

Egan, J. & Strohm, M., “The Debt Avalanche Method: How It Works And How To Use It.” Forbes. July 30, 2021.

* Program length varies depending on individual situation. Programs are between 24 and 60 months in length. Clients who are able to stay with the program and get all their debt settled realize approximate savings of 43% before our 25% program fee. This is a Debt resolution program provided by JGW Debt Settlement, LLC (“JGW” of “Us”)). JGW offers this program in the following states: AL, AK, AZ, AR, CA, CO, FL, ID, IN, IA, KY, LA, MD, MA, MI, MS, MO, MT, NE, NM, NV, NY, NC, OK, PA, SD, TN, TX, UT, VA, DC, and WI. If a consumer residing in CT, GA, HI, IL, KS, ME, NH, NJ, OH, RI, SC and VT contacts Us we may connect them with a law firm that provides debt resolution services in their state. JGW is licensed/registered to provide debt resolution services in states where licensing/registration is required.

Debt resolution program results will vary by individual situation. As such, debt resolution services are not appropriate for everyone. Not all debts are eligible for enrollment. Not all individuals who enroll complete our program for various reasons, including their ability to save sufficient funds. Savings resulting from successful negotiations may result in tax consequences, please consult with a tax professional regarding these consequences. The use of the debt settlement services and the failure to make payments to creditors: (1) Will likely adversely affect your creditworthiness (credit rating/credit score) and make it harder to obtain credit; (2) May result in your being subject to collections or being sued by creditors or debt collectors; and (3) May increase the amount of money you owe due to the accrual of fees and interest by creditors or debt collectors. Failure to pay your monthly bills in a timely manner will result in increased balances and will harm your credit rating. Not all creditors will agree to reduce principal balance, and they may pursue collection, including lawsuits. JGW’s fees are calculated based on a percentage of the debt enrolled in the program. Read and understand the program agreement prior to enrollment.

JG Wentworth does not pay or assume any debts or provide legal, financial, tax advice, or credit repair services. You should consult with independent professionals for such advice or services. Please consult with a bankruptcy attorney for information on bankruptcy.