Make This the Year You Get Out of Debt

On average, American households with credit card debt hold credit card balances of more than $5,700.1 Servicing this debt with a minimum payment of $25 per month and an average annual percentage rate (APR) of 14.00% means you’ll pay more than $3,325 in interest alone.2 If you want to shake loose from your credit card debt this year, here’s your plan:

  • Pick one credit card for emergencies. From among your cards, pick the one that offers the lowest annual rate—that’s your emergency backup.

  • Stop using your credit cards. Find a dark place for all your other cards—as far away from you and your wallet as possible. Better yet, get out your scissors and cut them up.

  • Prioritize paying off your credit cards. Pick the highest-rate card you have with a balance. Pledge to pay the minimum payment PLUS as much more as you can afford every month. Make it enough to create a sizeable hole in the outstanding balance.

  • Stay focused. When your highest-rate card is paid off, pick the next card to attack. In the meantime, check to see if you can get a lower rate on any of your cards. If you carry a $3,000 balance, make a minimum monthly payment of 3% and are charged a 16% annual percentage rate (APR), you’ll pay interest of nearly $400 in the first year. If you can switch to a card with a 9% APR, that drops to about $220—a savings of roughly $15 a month. Finding a lower rate may help keep the balances in check as you work to whittle them down.

  • Protect your credit rating. While focusing on paying off your high-interest-rate cards in order, be sure to pay at least the minimum required payment on all your other accounts each month.


1 “Credit Card Statistics, Industry Facts, Debt Statistics,”, July 2014.
2 The True Cost of Paying the Minimum,, December 2014.

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