Paying Off Credit Card Debt: Tips & Methods

Written by: Tom Jackson

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With stunning interest rates ticking away relentlessly, and late fees eager to pounce on the slightest misstep, credit card debt erodes a consumer’s financial stability.

These are not small stakes we’re talking about. U.S. household debt has risen with inflation. From credit cards to mortgages,  car loans and  other forms of obligations, we owe more than $15 trillion, for an average of $155,622 per household.

Interestingly, credit card debt shrank by 14% nationwide during 2020-21. Despite that dip, a credit card debt averages more than $6,000 per household. And balance-carrying is commonplace with more than 50% of all active U.S. credit card accounts not paying off at the end of the month, according to the American Bankers Association.

Defeating credit card debt comes down to strict adherence to assorted strategies with  demonstrated records of success.
Civilians and active-duty military personnel alike have access to several proven, do-it-yourself methods, and while there is no single correct way of conquering debt, some tactics have proven, over time, to be more reliable than others.

These methods fall under the categories of individual payments vs. consolidation. Which one is better for you largely depends on the amount of credit card debt you have, your credit score, and your ability to balance your budget.

We’ll explore these strategies below, but first, here’s a word of counsel from Lt. Col. Jerry Quinn, U.S. Army Reserve and chief operations officer of the American Armed Forces Mutual Aid Association:

“Your goal should be for a consistent, deliberate and smooth approach to paying off debt,” Quinn says. “Jumping in too quickly and being too hard on yourself can result in missteps and unnecessary stress.”

Utilize the Servicemembers Civil Relief Act (SCRA)

Adopted by Congress in 2003 and amended nearly two dozen times since, the Servicemembers Civil Relief Act provides a variety of financial protections and benefits active-duty military personnel and their families can use to improve their debt situations.

SCRA protections cover anyone in military service, including the traditional five pillars of U.S. defenses — Army, Navy, Air Force, Marines, and Coast Guard — plus reservists on federal active duty, National Guard members on federal duty beyond 30 days, commissioned officers of the Public Health Service and the National Oceanic and Atmospheric Administrations, and service members who are ill or on leave.

SCRA benefits include:

  • Caps on interest rates of no more than 6% on debts carried from civilian life into active military duty, including credit cards, auto or personal loans, and home mortgages.
  • Service members who are renting a dwelling or leasing a car may terminate, without penalty, those agreements in some circumstances; landlords and mortgage holders must get a court order to foreclose on or evict service members.
  • Military personnel can, in some situations, terminate contracts for phones, cable, and internet without penalty.
  • Protections against a default judgment in a civil action (a court ruling in favor of a plaintiff when the other party fails to appear or make a defense).

In some cases, the service member must be proactive. The 6% interest rate cap does not happen automatically — lenders must be alerted. To claim the special rate, military personnel must send a written request to the credit card issuer, accompanied by a copy (not the original) of their military orders.

If this is you, it’s in your interest to make this happen as soon as possible. Waiting can be disastrous: If you fail to file within 180 days of leaving active duty, you will give up your rights to a SCRA rate cap.

Keep in mind, because SCRA is designed to both ease the burden while rewarding the choice of committing to military life, benefits cover only those debts acquired before your service began.

Create a Budget

In the world of personal finance, a budget is your battle plan. You must know, to the last detail, how your finances work. Only with this knowledge can you properly decide how to tackle your credit card debt.

So: Create a budget. Already have one? Review it. Time changes everything.

It’s empowering to know where your money comes from and how it is spent. Whether you write it on a legal pad, keep it on a spreadsheet, or use an app or internet tool that tracks everything, it’s vital you get a realistic handle on your monthly finances.

Identify expenses that are fixed (rent or mortgage payments, car payments) and those that vary (utilities, revolving credit card minimums, groceries, entertainment). If you’ve been making ends meet by putting expenses on credit cards, pinpoint which expenses can be eliminated or trimmed.

Once you figure out your budget, you have to stick by it. Short of winning the lottery (not a recommended personal finance strategy) or inheriting a windfall, the best way to pay off debts is through the application of faithful budgetary discipline.

“Stay loyal to your budget and commit to cutting out unwise spending,” Quinn says. “If you can find even a few dollars to put toward paying off credit cards each month, you’re making progress! … Military members are tasked with managing stressful situations each day. Don’t add to it by not giving yourself enough leeway during your effort to improve your financial circumstances.”

Cut Unnecessary Spending

Among the benefits of setting up a budget is that it forces you to scrutinize ways you spend money without thinking about it. Impulse buys in the checkout line, visits to the coffee shop, premium cable channels you never watch, subscriptions that automatically renew. The list is endless.

For households maintaining credit card balances, tamping down unnecessary spending is crucial to getting your finances in order.

“Think of things that can be fun to do, but on a budget,” says Jeanne Kelly, founder of the New York-based Kelly Group Coaching Inc. “When I was paying off debt, I went to the library for books and free events, and I said no to dinners out but yes to getting together at each other’s homes.”

Then there’s managing your required spending. Everybody likes airline miles, hotel points, or cash back. If you’re among the few who pay off these rewards-generating credit card charges as they occur — and we don’t mean monthly; we mean the very same day — then, congratulations, the following advice is not for you.

Pay cash. Consider the envelope system of budgeting, where cash designated to pay certain expenses is divvied into actual envelopes and paid from the envelopes as those expenses arise. When the envelope is empty, spending on that budget item is finished until you start saving for the next payment.

Take your credit cards out of the rotation, says Army veteran Annette Harris, founder of Jacksonville, Fla.-based Harris Financial Coaching. “It’s essential to eliminate the need to use your credit card for purchases [in order] to decrease your balance continually.”

A key benefit of paying cash: Unlike putting a purchase on a card, which tends to be all bliss, paying cash hits your bottom line in real time. The money is gone. It’s a bad feeling, but that’s what will help you avoid spending in the first place.

With your budget established along with your commitments to control spending and pay cash while you claw your way into the black, consider putting raises, extra pay from deployment assignments, bonuses, or financial windfalls toward your debts. The sooner you dig out of your hole, the sooner you can enjoy the rewards that come with experience and increases in rank.

Pay More Than Minimum

Consumers carrying a balance on one or more credit card(s) can, theoretically, eliminate those balances by paying nothing more than the monthly minimum. Credit card companies are obliged to chart this plodding, extraction-by-minimum-payment information in your statements.

But this is the war-in-Afghanistan approach: It will take forever, the cost will be extraordinary, and the outcome will be less than satisfactory.

That’s why you need to pay more than the minimum on your carryover balances. Now, let’s explore some of the proven methods of how to successfully deploy some more-than-the-minimum strategies.

Credit Card Payment Methods

Do-it-yourself debt extraction generally follows one (or a combination of) the following strategies:

  • Debt Snowball
  • Debt Avalanche
  • Balance Transfer Credit Cards
  • Debt Consolidation

Debt Snowball Method

The debt snowball involves life imitating art: that is, every snowball-rolling-down-a-hill cartoon you’ve ever seen, starting small, then growing as it picks up speed, ultimately consuming everything in its path.

Similarly, using the debt snowball approach, consumers target the smallest credit card balance first, using every extra dollar in their budgets to pay it off. Once the smallest balance is zeroed out, attention shifts to the next-smallest balance; the budget line freed from attacking the first balance now is available to make a larger payment against Balance No. 2 — and so it goes until all attention (and money freed from monthly minimums) is focused on the final, largest, balance.

It’s important to keep making on-time minimum payments on all your credit card balances while the snowball works its magic elsewhere. Timely minimum payments are holding actions that will get reinforced as other balances are conquered. Keeping all your accounts current will prevent losing ground to late fees, higher interest rates, harming your credit score, or, worse yet, defaulting.

Debt Avalanche Method

The debt avalanche method resembles the debt snowball in that the consumer focuses primary attention on a single balance while maintaining on-time minimum payments on the rest.

The difference is, the debt avalanche targets the balance with the highest interest rate, no matter what the balance.

Studies show the debt avalanche method saves disciplined financial warriors in the long run. But if the high-interest-rate balance is also one of your larger balances, you’ll delay the satisfaction of getting that first balance to zero.

Balance Transfer Credit Card

Balance-transfer cards are everywhere these days, and the smart use of them can save the consumer hundreds of dollars.

Reserved for those with reasonably good credit – you’ll need a credit score of at least 680 to even be considered — balance-transfer cards allow successful applicants to move their balances — usually for a fee — to accounts with low, even zero, introductory interest rates. Those with low credit scores, a history of late payments, defaults, or other credit difficulties likely won’t qualify.

“Check on the fees,” Kelly says, “but also, if you want to take advantage of the offer, put a budget plan together to pay the debt off before the interest would start.” In short, she says, “Do the math.”

The duration of these promotional — sometimes called “teaser” — rates vary by card but can last 24 months. Pay them off before the promotional period ends, or you’ll get socked with a soaring interest rate.

Credit Card Consolidation Loan

Another strategy for managing credit card debt is by corralling your balances under a consolidation loan. Whether it’s an unsecured personal loan, a cash-out refinance of your home, or a home-equity line of credit, a consolidation loan puts your credit card debt into a single payment at an interest rate that should be a fraction of those charged by credit card issuers.

If you’re going the unsecured personal loan route, make certain you investigate how to apply the SCRA rate cap that you’re entitled to.

Active-duty service members or veterans who have a VA-backed mortgage can apply for a Military Debt Consolidation Loan, also known as a VA Consolidation Loan, to help overcome financial trouble. Borrow up to the appraised value of your home and use the equity to pay off unsecured debt.

» Learn More: Should You Pay Off Debt or Save for a House?

What If You Can’t Pay Off Your Credit Card Debt?

If none of the solutions offered above work for you, there are other avenues of hope available.

Consumers who cannot keep up with their minimum payments should contact the credit card issuer immediately. Explain your situation. Do a little homework ahead of time (remember your budget study?) so you can support your claims with facts. You may discover the company is willing to work with you if you’ve simply hit a financial emergency.

Unsure of your best course? Rather not go it alone? If the military teaches anything, it’s the wisdom of relying on experts to help support a mission. In the world of debt, the experts are a telephone call (or mouse click) away at a nonprofit credit counseling agency.

A few (free, no-obligation) minutes spent with a credit counselor may clear up which path is best for you, whether you would be a good candidate for a debt management program, or if, as a last resort, you must consider filing for bankruptcy.

Consider, too, visiting with your installation’s Personal Finance Manager and/or Legal Assistance Office. As a member of the military, you have access to free, expert advice and support from people who know and understand your personal battlefield.

“You need to commit to taking command of your finances and create a plan to get out of debt,” Quinn says. “It’s a process and should be treated as one.

“Connecting, socially and digitally, with trusted people and organizations that promote responsible spending habits will help keep you in the right frame of mind to tackle debt.”

It’s crucial, as a service member, to keep your credit history as shiny as your shoes at inspection. Credit factors into the security clearance requirements, and negative information on your credit report can put it at risk.

“The military wants to know that you can handle your finances carefully while operating in an advanced position,” says Harris, the financial coach. “When receiving a security clearance, you have access to protected information. If individuals are having trouble with their credit, [enemies] could use that protected information for financial gain.”

And there you are, smack dab in the middle of the Cold War all over again. Use the tools available to you to get squared away out there.

About The Author

Tom Jackson

Tom Jackson focuses on writing about debt solutions for consumers struggling to make ends meet. His background includes time as a columnist for newspapers in Washington D.C., Tampa and Sacramento, Calif., where he reported and commented on everything from city and state budgets to the marketing of local businesses and how the business of professional sports impacts a city. Along the way, he has racked up state and national awards for writing, editing and design. Tom’s blogging on the 2016 election won a pair of top honors from the Florida Press Club. A University of Florida alumnus, St. Louis Cardinals fan and eager-if-haphazard golfer, Tom splits time between Tampa and Cashiers, N.C., with his wife of 40 years, college-age son, and Spencer, a yappy Shetland sheepdog.


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