Paying off credit card debt in 2022: 4 strategies that work

As of 2021's third quarter, Americans owed around 800 million in credit card balances. This statistic shows just how grave the debt situation is in the United States.

If you are reading this, you are probably looking for tactics to help you pay your own debt. The good news is that you are at the right place.

While there is no clear-cut method to pay all your debts at once, there are methods that have stood the test of time, and that may work perfectly for you. This article discusses strategies to help you pay off your credit card debt this year.


The Effect of Making Minimum Payments  

Before diving in deeper to discuss the strategies, it would be wise to understand how paying the minimum debt on your credit card affects you.

When you open a credit card, the bank will expect you to repay at least some of your debt each month. However, they will not expect you to pay off your monthly debt. Instead, they will calculate only a small amount you need to pay to keep your account in good standing. This amount is known as minimum payment.

Different card companies have different minimum payments. Your issuer's minimum payment will depend on your account balance and credit card. However, if your account balance is small, the minimum amount will be set as a fixed amount instead of a percentage. In cases where your account balance is small, the issuer may ask that you pay the amount in full.

If you are unsure how your issuer calculates the minimum amount due on your credit card, you can check the agreement and call customer service. To know your upcoming bill, you can check your credit card statement.

The good side to paying the minimum debt is that it helps prevent a bigger debt as you carry debt from one month to another and prevent any real damage to your credit score. Therefore, it may be advisable to pay more than the minimum amount per month. It would be best if you only resorted to the minimum when facing a financial crisis and would not like to face bigger problems in terms of late fees, penalty APR, credit score damage, and credit card delinquency.

The Downside of Minimum Payments  

While paying the minimum payments has its good points, relying on these payments in the long term can be detrimental.

One of the main reasons experts discourage minimum debt payments is that your debt eventually becomes more expensive. Over time, you will continue racking up interest by revolving the outstanding balance from one month to the next. This increasing interest fee will add to an already big burden.

Furthermore, your credit card utilization may affect your credit scores significantly because as you continue to pay the minimum amount due for each month, the credit utilization rate will increase in the subsequent months. It is advisable to keep your card utilization and overall utilization under 30% to avoid any potential effects on your credit score.

Strategies to Help Pay Off Debt Faster  

Now that you understand the danger of paying off only the minimum debt, we can look at some of the best strategies to get you out of debt as soon as possible. Read on below:

Debt Consolidation Loans  

By consolidating your debts into a debt consolidation loan, you can put your higher interest balances into one whose interest rates are lower. You will finish paying off your debts faster as there will be no accruing interests. Some of the best ways to consolidate debt include:

Tapping into Home Equity  

If you have paid your mortgage to an extent where you have considerable equity in your home, you can use this equity to pay some of your credit card debt. However, while reducing your debt, you also need to realize that your HELOC will most likely charge a lower rate than your credit card. Furthermore, HELOC interest payments are tax-deductible.

Transferring your Balances  

You can move debt off high-interest cards to lower balance transfer rates. Usually, balance transfer fees range between 3 to 5%. However, you will make significant savings, usually more than the transfer fee from the lower interest rates. Alternatively, you can take personal loans.

Remember to control your spending when using a balance transfer credit card to avoid piling up new debt if you choose debt consolidation as a method to pay off debt fast. Furthermore, you need to stay on track with your payments because late payments could lead to the revocation of your introductory offer.

Debt Snowball Method  

This method eliminates debt by first focusing on the account with the lowest balance. After paying your smallest balance, you will then use the money you were paying for the debt to pay the next smallest balance until you are done with all your debts. As you pay the balances, ensure you have set aside a part of your budget that enables you to pay off the minimum on all your credit cards.

The advantage of using this method to pay off credit card debt is that you will see progress in paying your debt pretty quickly, which builds your momentum. Therefore, you are more likely to stay motivated and work toward your goal of becoming debt-free. Furthermore, you will feel less overwhelmed with fewer balances.

The disadvantage of the snowball method is that it does not consider your minimum monthly payment. For this reason, we encourage you to make an arrangement to settle each month's minimum on all your debts to avoid piling up more debt.

Debt Avalanche Method  

The debt avalanche method as a debt repayment strategy works so that you pay the high-interest debts first while making the minimum payments for other credit card accounts. Then, once you pay off your largest debt, you will take the money and put it into the payment of the next largest debt and so on. You will then repeat this process until your debts are paid off.

This method will be an excellent option if you want to save on interest charges. However, if your account with the highest interest rate is the one with the biggest balance or a high-interest debt, you may take some time to clear the payments. This may be demoralizing compared to the snowball method that builds momentum on debt payment.

Review Your Spending  

After choosing a method to help curb your debt crisis, you will need to adjust your spending to save money and speed up the process further and help you in the future after you are out of debt. First, you will need to categorize your monthly spending as part of the debt management plan. You can use your credit card statement given by the issuer to categorize your spending. Then you will need to look into the areas where you can cut back on spending and use the money to pay off your debts.

You can also start paying with cash when you purchase items, as this will help reduce overspending and impulse buying and eliminate transaction fees that you will accrue using credit cards. Furthermore, paying with cash can clarify your budget as you can see how much is coming in versus going out.

At the same time, you can use any financial windfalls such as raises and bonuses to repay debt instead of spending the money. You can start by saving money from these windfalls into an emergency savings account before using it to pay down your cards.


Paying off debt may seem overwhelming, especially if you do not have a plan. The strategies we have discussed include consolidating debts with a personal loan, the snowball method, the debt avalanche method, and adjusting your monthly spending.

These strategies are tried and tested, and can help you ease the burden of debt. Remember, that every debt pay off leads to the ultimate goal of being debt-free.

* Specific loan program availability and requirements may vary. Please get in touch with the mortgage advisor for more information.

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