Got Debt? Seven Repayment Strategies

By Mike Peterson
In March 21, 2014

Few things in life can be as stressful as living with credit card debt.  High-interest debt can make it difficult to do things you want to do, like build up retirement savings or an emergency fund; take vacations; or even buy a house. 


If you’ve ever tried to pay down a large credit card balance, you know that it’s not easy.  But it’s also not impossible.  Want to start paying down your high-interest credit card debt today?  Here are seven tips to get you started.


1.  Stop using your credit cards. 

This is the very first thing you should do if you’re serious about getting out of debt.  After all, you can’t pay down your debt if you’re constantly building it up. Stop using your credit cards.  If you’re an impulse shopper, take your cards out of your wallet and leave them in a safe place. Commit to living credit-card-free until you’ve paid off your balance(s).


2.   Find out exactly how much you owe.

This is critical.  Before you can make a plan to pay off your debt, you have to know exactly what you’re dealing with.  Start by sitting down with all of your credit card statements.  If you’ve only got one credit card, this won’t be that difficult, but if you’ve got multiple cards, you might want to create a spreadsheet or a list.  Write down each card name, your balance, and your interest rate.


3.  Call your credit card lender(s) and ask for a lower interest rate.

Sometimes, all you have to do to get a lower interest rate is ask.  Call the customer service department and see if they’re willing to negotiate.  Remember to be polite, and keep in mind that if you’ve got a history of late or missed payments, this might not work.  But if you’ve got a solid payment history, they might be happy to drop your interest rate to something a little more manageable.


4.  Consider a balance transfer.

If you can’t get a lower interest rate (or you can’t get one that’s low enough), you might want to consider applying for a balance transfer and taking advantage of a super-low or even 0% introductory interest rate.  This can be helpful if you’ve got a card with a very large balance and a high interest rate.  You have to be careful with balance transfers, though:  Make sure you read the fine print, and make sure you know what sorts of fees apply, if any. 


Check out this article for a more in-depth discussion about the pros and cons of balance transfers.


5.   Start paying off the card with the highest interest rate.

Once you’ve negotiated for a lower interest rate and/or completed any balance transfers, it’s time to focus on knocking down your debt.  I recommend using the snowball method of debt repayment:  Start with the card that has the highest interest rate, and figure out how much you can pay every month above the minimum payment.  Pay the minimum on any other cards until your high-interest debt is paid off.  Once that debt is paid, take the money you were paying and start paying the card with the next-highest interest rate, and so on. 


Learn more about the snowball method.


6.  Be Patient.  And Realistic.  Remember that you didn’t get into debt overnight – so you’re not going to get out of debt overnight, either.  Don’t get discouraged, and try to set realistic goals for debt repayment.  And make sure you choose monthly payments that you can actually afford.  Review your budget and make sure that your payments leave you enough money to cover bills and other monthly expenses.


7.  Keep in touch with your credit card lender.  If you know that you’re in a situation where, for example, your payment might be a few days late or you simply can’t swing the minimum payment, call your lender and speak to a customer service representative.  If you’ve got a good payment history, they may be able to work with you.  Whatever you do, though, don’t avoid them – that will only make things worse.


Remember, it’s never too late to start taking a chunk out of your high-interest credit card debt.  If you stop using your cards and start making regular payments, you will pay down your debt, even if it takes a while.



Mike is the author of “Reality Millionaire: Proven Tips to Retire Rich” and he has been published in a variety of local and national publications including Entrepreneur Magazine, Deseret Morning News, LDS Living Magazine, and Physicians Money Digest. He holds a B.S. in business administration from the University of Phoenix.

Click "More" for important American Credit Foundation client transition information