What is the Best Way to Manage Credit Card Debt?

By Lacey Langford
Published on: 02/18/2020

“How much credit card debt do you have?” is a question I ask most coaching clients.

The response is often a ballpark figure.

Sometimes people can give me the exact amount off the top of their heads. Other times, I hear the worrisome, “I don’t know how much.” That’s because they aren’t managing their credit card debt well or at all.

Credit card debt is something many adults struggle with. Unfortunately for some, it becomes a cycle they get stuck in.

According to Experian’s 2019 Consumer Credit Review, 75% of consumers with credit cards carry an average balance of $6,200.

In 2019, cards with higher than average balances had grown by 3%. That means three-quarters of the adult population is managing credit card debt in some way, shape, or form.

That's why learning to manage – and pay down – credit card debt is more essential than ever. So we put together this guide to help you do just that.

In this article

12 ways to better manage your credit card debt

In general, some of the best ways to manage your credit card debt include:

  • Paying your bills on time
  • Paying more than the minimum payment
  • Improving your spending habits
  • Getting your interest rate reduced
  • Using a debt strategy to pay off debt

Here are 12 more ways to accomplish the management and payoff of credit card debt.

Also included? Information on how to keep yourself from going back into credit card debt once you’re finally out of it.

1 - Learn how to use credit cards responsibly

When trying to get out of credit card debt, the first thing you want to do is understand proper credit card use.

Credit cards are good to use for things like building your credit history, earning reward points, and as a more secure form of payment than cash.

Using a credit card responsibly also means paying your bills on time and for the amount due. Not paying your bill on time will harm your credit, since payment history is the biggest factor considered when calculating your credit score.

Large amounts of debt will also reflect poorly on your credit score.

Don’t use a credit card to live outside your means. Instead, use credit cards to buy what you need that’s within your budget and ability to pay back.

2 - Know your budget

A budget is a plan for how you’ll manage your money by tracking the dollars you earn and spend. A budget gives you a clear picture of your financial life. It makes you aware of the extra money you have to spend or the lack of money you have to spend.

Knowing your budget is an essential part of your debt management because it shows you how much money you have to pay bills on time and pay down debt.

Especially when it comes to paying off debt, you’ll need to know how much free cash flow you have to put additional funds towards debt payments.

Learn how to create your budget HERE.

3 - Pay more than the minimum payment

Over time, paying only the minimum amount will cost you more money.

Why? Because as you carry a balance on that credit card, that balance accrues interest daily. If you pay the full balance off by the due date, however, you don’t get charged any interest.

For example, if you have just over $6,000 in credit card debt with an interest rate of 14.99% and a minimum payment of about $20, you could end up paying about $4,000 in interest before you pay off that initial balance, as the chart below shows.

The chart also highlights how much you could save if you pay double the minimum each month or $100 more than the minimum.

minimum payment chart

4 - Understand your credit utilization rate

You’re probably wondering what credit utilization is. A credit utilization rate is a ratio between how much revolving credit you have compared to how much you have available.

If you have $6,000 in credit card debt and $20,000 available to use, your utilization rate is 30%.

Your credit utilization rate is a big part of what is used to determine your credit score.

A lower credit utilization rate means your credit cards aren’t maxed out and that you’re managing your credit well.

A higher credit utilization ratio can indicate you aren’t spending your money wisely and have higher amounts of credit card debt.

Ideal credit utilization is somewhere below 30%. If it’s above 30%, make lowering your credit utilization ratio a priority in your credit card debt management plan.

Lowering it will decrease your debt and could increase your credit score!

5 - Improve your spending habits

If it’s broken, you need to fix it. Poor habits like spending more than you earn aren’t right. Change your spending behavior to be more in line with your budget.

Implementing money-saving techniques like using coupons, buying on sale, and general frugal living can help improve your spending and save more money to put towards paying off debt.

Taking the time to develop good spending habits is also part of a long term strategy to manage your debt and finances.

You don’t want healthy spending to be a temporary solution. Instead, make it a long-term lifestyle change to help you reach your financial goals.

6 - Review your credit report

Your credit report is a review of all your past and present credit activity.

It lets you know every creditor you owe money to. But more importantly, it lets lenders know the history of your debt payments to determine if they want to loan you money and at what interest rate.

Your credit report impacts your ability to borrow money, so you want to make sure what it contains is accurate and positive.

Mistakes on credit reports are fairly common. Review your report to make sure your personal information is correct and that there are no debts listed that were not taken out by you.

Also, review your report to ensure you know all the money you owe. It could be that you moved and owed money to a service provider that you weren’t aware of. It’s worth taking the time to review your credit report. It could save you money now and heartache later by catching problems early.

7 - Pay your bills on time

Late credit card payments will drag down your credit score and cost you more money.

Not paying your bill on time and in full will lead to late fees as well. Avoiding late fees means having more money you can use to pay down your credit debt instead of adding to what you owe.

The easiest way to guarantee your payments make it on time is to set up automatic online payments. You can use auto-pay via your bank or set up payments with your credit card company. Making the payments automatic will help you avoid any potential late payments or fees.

Just make sure you’re aware of the processing times involved to transfer your money.

Many banks take about 3 or more business days to transfer funds. Also, make sure you have enough money in your account before the funds withdraw, or you could face fees for returned payments.

8 - Get your credit card interest rate lowered

Your interest rate has a significant impact on your credit card debt. It’s the cost you’re paying to borrow money. Getting it lowered can save you lots of cash over time.

The easiest way to get the interest rate on your credit card lowered is to simply ask. It sounds too good to be true, but it’s not. If you’ve been paying your bills on time and have been a long-time customer, many credit card issuers (though not all) are willing to help you out.

Author of "I Will Teach You to be Rich," Ramit Sethi has a script you can use to call your credit card company to get your interest rates reduced. You can find that script HERE.

9 - Use a debt strategy to pay off debt

Part of managing debt from credit cards includes having a plan to pay back what you owe, because you don’t want to be paying lifelong credit card interest.

There are three main strategies to pay off credit debt:

  1. The snowball method
  2. The avalanche method
  3. The "do what you can" approach

Different people have different points of view on which method or approach is the best. I’m a big believer in doing what works best for you.

No matter the method you choose, the bottom line, you’re still paying off your debt. And that is the goal— to get out of debt.

Let's break those strategies down a little more, so you can decide which is best for you.

Strategy #1 - the debt snowball method

The debt snowball method was made famous by Dave Ramsey. The goal is to get quick wins in paying off debt to get you excited and motivated to get out of debt.

With the snowball method, the focus is on paying off the smallest debt you have first. Once that debt is gone, you “snowball” the money that was being used to pay the previous debt into your next smallest credit card debt.

You keep doing this until all your debt is paid off.

Strategy #2 - the debt avalanche method

Under the debt avalanche method, the goal is to pay off your debt with the highest interest rate, while continuing to make minimum payments on all of your other debt.

This approach could save you the most money on interest, but it may not feel as motivating as the snowball approach.

Strategy #3 - the debt “do what you can” method

The “do what you can” approach is a combination of the avalanche and snowball method. The goal is to do what works best for you.

If you need some quick motivation in the beginning, try paying off one or two of your low balance credit cards.

Then you can switch to your debt with the highest interest rate. Or you can do it vice versa. Pay one credit card with the highest interest rate, and then quickly pay off some of your smaller balances.

10 - Consolidate your debt

High interest credit cards are the worst. High interest means you’re paying more for the money you borrowed. And many people don’t just have one high interest rate card, they have multiple high interest rate credit cards.

For some people in this situation, debt consolidation might be a way to help them reduce the amount they pay in interest.

Debt consolidation is when you take a high-interest rate credit card or other debt and roll them into one lower payment. The benefits are that your debt can be easier to manage and you will save money over time in interest payments.

The two main methods for debt consolidation are to do a debt consolidation loan or get a 0% interest credit card that allows for a balance transfer.

With a debt consolidation loan, you take the loan money and use it to pay off your credit cards balances. Then you pay one payment to your new consolidation loan.

With a balance transfer credit card, you move your old credit card balances to the new card.

Knowing if debt consolidation is good for you depends on your situation. If you don’t have a lot of debt and are able to pay it off in a reasonable amount of time, consolidating debt might not be for you. But if you have a lot of high-interest debt it might be something you discuss with a financial coach or debt management counselor.

Check out #12 on this list for more help connecting with a professional.

11 - Build an emergency fund

When you are actively managing your credit card debt, the last thing you want is for a financial emergency to come along and muddle up all your hard work. Building up an emergency fund with a cash reserve of $1,500 to $2,000 will help you avoid needing to put emergency expenses on your credit card.

A great way to start saving money is to set up automatic transfers from your checking account to your savings account each month. Review your budget to figure out how much you can set aside for saving each month.

12 - Find the help you need

It’s all right if you need a little help. Don’t be afraid to seek out tools, resources, and services to help you manage credit card debt. You’re not alone.

The NFCC Consumer Financial Literacy Survey shows that around “24% of adults would reach out to a professional non-profit credit counseling agency for help if they were having financial problems related to debt.”

Here are three places to get assistance with credit card debt management.


The Association for Financial Counseling and Planning Education (AFCPE) provides a search tool to help you find local or online AFCPE certified professionals that can assist with managing debt, credit report reviews, spending plans, and budgets.


The National Foundation for Credit Counseling (NFCC) has debt management counselors that can help develop a plan for getting out of debt. They also have counselors that can assist with credit report reviews.


Springfour offers local resources to help with your finances. Just enter your zip code and find help with food and utility savings, health insurance, and financial counseling.

How to stay out of debt

Now that you’re managing your credit card debt, it’s important to stay out of debt. There are simple steps you can take to keep your cash flow each month strong and your savings built up so you don’t need to use your credit cards.

Pay yourself first

Build up your savings by paying yourself before you pay other bills.

Paying yourself first means making your savings a priority over your spending. When you have emergency savings built up, it helps you avoid going into debt to cover expenses.

Live within your means

Don’t spend more than you make.

It sounds simple, but it’s easier said than done. It can be tempting to buy things you need and even more tempting to buy things you want. But when it doesn’t fit in your budget, you should not spend the money.

If you have to have it, try to find another way to get the item, get it at a lower cost, or don’t buy it at all. Doing so will help you avoid going back into debt.

Reduce your costs

Staying out of debt can be aided by reducing the money you need to spend each month. Review your budget and find expenses you can either reduce or eliminate completely.

For example, look at your cell phone usage. Are you using all of your minutes? If not, reduce your plan for some cost savings. Review how much you spend going out to eat. Taking a closer look at how you spend money will help you find extra cash so you don’t need to use credit.

Key takeaways

Managing your credit card debt takes time and planning. But the good news is, the time and preparation you put in will help reduce or eliminate your debt, improve your credit, and ultimately reduce your financial stress.


  1. The Balance. "How to Manage Debt of Any Size". https://www.thebalance.com/how-to-manage-your-debt-960856

  2. Insider. "5 steps for managing your credit card debt when you lose a source of income". https://www.businessinsider.com/personal-finance/steps-managing-credit-card-debt-change-loss-income

About the author

Lacey Langford, AFC® is The Military Money Expert® and the founder of LaceyLangford.com, a personal finance blog specializing in the unique world of the U.S. military. Lacey's the creator and host of The Military Money Show, a podcast dedicated to helping the military community with personal finance.

She's an Accredited Financial Counselor® with over 15 years of experience in financial planning, counseling, and coaching. Her education includes an Executive Certificate in Financial Planning from Duke University and a B.S. in Finance from the University of North Carolina at Wilmington. As a U.S. Air Force Veteran, military spouse, financial coach, speaker, and writer, she changes people's lives from being fearful of money to having control and confidence with it.

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Written on February 18, 2020
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Disclaimer: Self is not providing financial advice. The content presented does not reflect the view of the Issuing Banks and is presented for general education and informational purposes only. Please consult with a qualified professional for financial advice.

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