For most people, credit card debt is a burden. It not only damages your financial peace of mind but your credit score as well. Plus, credit cards are notorious for having high-interest rates.

This is why quickly eliminating credit card debt can pay off in more ways than one. Whether you’re carrying high-interest debt on a single card or multiple lines of credit, there is hope yet to dig yourself out of the hole. Discover the best way to pay off credit card debt and stay debt-free.

What are the steps to eliminate credit card debt?

Every cardholder has a unique financial situation. There are plenty of personal finance reasons why someone may carry debt on their credit card — for example, an individual could have recently lost their job and had to charge all their bills to a credit card for a short time.

Another person may have neglected to keep track of their transactions throughout the month, and on the monthly payment due date, they realized that they had almost reached their credit limit. These simple steps can help you get your finances back on track no matter the reason for your credit card debt.

Step 1: Create a monthly budget

Budgets account for your income and expenses, allowing you to understand where your money comes from and where it goes. While monthly budgets are most common, some may opt for daily, weekly, or quarterly plans based on financial circumstances.

By creating a budget, you can figure out how much you’re realistically able to spend and save in a given timeframe. Then allocate funds toward housing, groceries, or debt payments. Take charge of your finances with a detailed monthly budget and consistently reduce your credit card debt.

Step 2: Develop a strategy to make credit card payments

Depending on the number of cards you’re carrying debt, your debt management plan may vary if you have debt on only one credit card. In that case, your financial project could involve scheduling automatic monthly payments of a fixed — or variable, as your budget allows — amount until the debt is gone. It is best practice to pay more than the smallest balance or minimum payment each month.

In cases where your debt is spread across two or more credit cards, additional factors, such as competing interest rates and statement balances, must be considered. When figuring out the best way to pay off credit card debt — or, in other words, the most manageable way — consider using either the debt avalanche method or the debt snowball method.

Avalanche method

Target the credit card balance with the highest annual percentage rate (APR), then focus on paying down that debt first. In the meantime, make at least the minimum payment on your other credit card(s).

After the priority debt is entirely paid off, apply this credit card payment strategy to the balance with the next highest interest rate. The debt avalanche method moves from highest to lower interest rates promoting savings by mitigating compound interest and preventing your high-interest balance from growing out of proportion to your initial debt.

Snowball method

The snowball method approach helps establish an early momentum in your debt repayment plan. To take advantage of the debt snowball method, direct most of your funds toward paying off your smallest credit card debt. Tackle the credit card with the most amount of debt last.

Combining the strategies mentioned above may benefit you as you progress on your journey to reducing card debt.

Step 3: Save Up an Emergency fund

An emergency fund lets you have peace of mind regarding financial difficulties, such as racking up unexpected credit card debt. With your monthly budget, you can quickly determine how much of your income can go toward savings.

However, since every individual’s situation is different, it may make more financial sense to pay off your debts or build excellent credit before having build up additional emergency funds.

How to avoid credit card debt

In addition to saving for an emergency fund, you have several effective options for lowering the chances of carrying debt on your credit card. Take advantage of good credit card habits, including regularly monitoring your transaction history, to achieve a debt-free lifestyle and improve your credit score.

Understand the credit card limit

Cardholders should aim to spend between 10 to 30 percent of their card’s credit limit. For example, if your card has an available credit line of $1,000, then spending $100-$300 per monthly billing period is ideal credit utilization.

A simple method to calculate this spending sweet spot is to take your credit card limit and multiply it by 0.10 or 0.30 to reach 10 or 30 percent, respectively. If you have more than one credit card, try to keep your total credit utilization between 10 and 30 percent to build your credit score.

Treat your credit card like a cash card

Another way to maintain good financial standing is to treat it like a cash card, wrote The New York Times Wirecutter.

You can pay off the entire credit card statement balance at or before the payment due date. Alternatively, you can pay the balance in small installments before the billing cycle ends.

Think of a credit card with a limit of $1,000 having a cash value of $100, when there’s a 10-percent credit utilization (i.e., using the previously mentioned formula, $1,000 multiplied by 0.10 amounts to $100), and up to $300 for 30 percent. This way, you can spend up to $300 before making a payment while staying within an ideal ratio of your overall available credit.

If, for instance, you had to pay for a $400 out-of-pocket medical bill with your credit card, after the transaction was posted to your account, you could make a payment of at least $100 to reach a 30-percent credit utilization of $300. Then pay off the remaining balance at once or via increments throughout the month before the statement balance is due.

Should I apply for a balance transfer credit card?

Occasionally, a cardholder may not have the immediate funds to apply credit card payment strategies like the debt snowball method to reduce what they owe. In such a case, it could make sense to consider a balance transfer credit card to pay down debt without interest accumulating.

You can pay off one card using another credit card by moving the balance to the newly opened account. Balance transfer credit cards often offer an introductory interest rate of 0 percent for a specific time, usually six to 24 months. After the intro period ends, however, interest accrues.

Do credit cards come with a finance tracking tool?

Credit cards have valuable benefits that allow cardholders to take charge of their financial health. For example, Vital Card provides a personalized digital experience, including the ability to review spending analytics and create custom credit alerts. Plus, it’s easy to schedule automatic payments, receive real-time notifications to review card activity, and monitor spending.

For people managing credit card debt, Vital Card lets cardholders make small adjusted sums during the payment period. The card’s user-friendly “pay slider” functionality involves an intuitive sliding scale that you can toggle to choose the amount you can pay today. This makes the process of paying down your statement balance not only manageable but so much more convenient.

Learn more about the Vital Card’s industry-leading digital features and tools to track your finances intelligently.


“Budgeting, How To Create a Budget and Stick with It” | Consumer Financial Protection Bureau

“Americans Pay $120 Trillion In Credit Card Interest…” | Consumer Financial Production Bureau

“Paying Off Credit Card Debt” | My Credit

“How To Use the Snowball Method To Pay Off Debt” | NerdWallet

“An Essential Guide To Building an Emergency Fund” | Consumer Financial Protection Bureau

“The Best Way To Use a Credit Card? Treat It Like Cash” | Wirecutter, The New York Times

Vital Card blog posts are intended for informational purposes only and should not be considered financial or any other type of advice.