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Getting out of debt is never easy. But credit card debt can be especially unmanageable because of high interest rates. According to Federal Reserve economic data, the average annual percentage rate for credit cards was 21.59% in February 2024.
At that rate, the average American credit card balance ($6,501 in 2023) would earn $785 in interest if paid off in 12 monthly installments of $607. If you were to pay a lower monthly installment (say $150), your interest payments could soon cost as much as the amount borrowed.
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Although credit card debt can be difficult to tame, there are some methods to help you regain control. If paying off $6,500 or more in credit card debt seems like an uphill battle, here are three strategies that can help you pay it off.
1. Use a credit card with balance transfer to avoid interest payments
The best balance transfer cards are designed to facilitate balance transfers, which is the transfer of credit card debt from one card to another.
The downside is that balance transfer credit cards have fees that typically range from 3% to 5% of the total transfer amount. This means that for every $1,000 you transfer, you’ll likely pay between $30 and $50 in fees.
These cards also limit the amount you can transfer, and this is usually equal to the card’s credit limit. While it’s not uncommon to be approved for credit limits over $6,500, that’s not guaranteed either. If you don’t have enough credit on one card, you may need more than one balance transfer credit card to transfer the entire balance.
2. Negotiate credit card interest rates
Credit card companies aren’t always the bad guys. While they make money from interest payments, they ultimately want you to pay back your debt. To that end, credit card companies sometimes work with borrowers to create a repayment plan to help them pay off their debt.
To negotiate your credit card debt, call the number on the back of your credit card and ask to speak to a representative in the debt settlement department. Once you’re connected, explain your situation. They might suggest solutions of their own or ask what payment plans they might offer.
For example, some credit card companies will lower the interest rate on your credit card for a period of time. During that time, they may set up a payment plan to ensure you pay off the balance before the reduced interest period ends. Others will accept a lower amount than you owe if you agree to pay the entire amount up front.
Not every credit card company will be willing to work with you, but asking is worth a try, especially if your options are limited.
3. Consider a debt consolidation loan
Debt consolidation loans combine balances from multiple credit cards into one monthly loan payment. The APR on these loans is often lower than credit cards, allowing you to apply the interest savings toward your repayment. Unlike some balance transfer credit cards, many of these loans have limits high enough to allow for a $6,500 debt transfer.
You may have to make some sacrifices
Hang in there. As hard as this time may be, staying focused and making a plan can be just what you need to get out of credit card debt. Most importantly, celebrate the successes along the way. Paying off $6,500 in debt is a big accomplishment, so plan something exciting to help you do it.
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