How to pay off your credit card debt

Paying off credit card debt can be challenging, but it’s not impossible. With a solid plan and some dedication, you can pay off your card debt and reach your financial goals faster. Here are some ways to get started:

When you’re struggling financially, squeezing out any more than the minimum payment amount can be tough. But if you’re only paying the minimum payment, you’ll stay in debt longer. A better option is to take any extra money you have each month and put it towards your credit card balance instead.

Create a budget you can stick to

Taking steps to tackle your credit card debt starts with knowing where you are financially and being honest about your spending habits. Take your monthly income and subtract all of your necessary expenses – bills, groceries, gas – to get a sense of how much money you have left over each month. Also, look to cut out unnecessary expenses, like coffee runs and takeout orders. Making these small sacrifices today and understanding your current financial outlook may help you reduce your credit card debt tomorrow.

Once you have a sense of how much money you have to pay off your credit card debt, you may want to try a debt repayment strategy. The right one for you will depend on your current financial situation. Here are a couple of popular methods:

Debt snowball strategy

With the debt snowball method, you’ll focus on paying off your smallest credit card balance first, then you’ll work your way up to your larger balances.

Follow these steps:

• Continue to make the minimum payments on all your credit cards
• Calculate any extra funds you have each month and apply your desired amount to the credit card with the smallest balance
• When the credit card with the smallest debt is paid off, move on to the card with the next smallest debt
• Continue this process until all your debts are paid off

The benefit:
The snowball method can be a good option for those who have several small credit card debts to pay off. This method lets you see progress faster, but you may end up paying more overall since you’re not considering your cards’ interest rates.

Debt avalanche strategy

With the debt avalanche method, you’ll start paying off your credit card balance with the highest interest rate, then you’ll work your way down to the card with the next highest interest rate.

Follow these steps:

• Continue to make the minimum payments on all your credit cards
• Calculate any extra funds you have each month and apply your desired amount to the credit card balance with the highest interest rate
• When the credit card with the highest interest rate is paid off, move on to the next highest interest rate card
• Continue this process until all your credit card debts are paid off

The benefit:
The avalanche method can help you pay less interest and get out of debt faster since you’re working towards paying down your higher-interest accounts first.

Interest charges can become a big part of what you’re paying on your credit card each month, especially if your card carries a high interest rate. A high interest rate can make it harder to pay off your debt. If your card has an interest rate of 15% or higher, try transferring your balance to a lower interest card. You might find special promotional offers for cards with low or 0% introductory interest rates.

Some issuers may require a minimum transfer amount to take advantage of a promotional balance transfer offer. If you can take advantage of one of these, transfer your balance right away and pay as much as you can each month. Reducing the interest cost is a great way to start paying off credit card debt.

Installment plans let you pay off large credit card purchases in monthly payments, usually at a lower interest rate than your standard credit card interest rate. With CIBC Pace It™, an installment plan service, you can budget your spending and pay for eligible large or unplanned purchases at a pace that works for you^ⓘ. 

Plus, you can still use benefits on your credit card like insurance coverage or travel rewards. When you convert your purchase into an installment plan, you choose the time frame to pay off the purchase from the available options. Once you firm up the details, your next credit card statement will show the installment payment due for that month, with interest.

Learn more about CIBC Pace It

By consolidating your debt, you’re bundling all of your outstanding debts into a single one. Not only will debt consolidation help you better organize your monthly payments, but it may allow you to pay less in interest. Here are a few ways to combine and manage your debt:

• Apply for a debt consolidation loan and just pay the single monthly payment on your new loan
• Open a line of credit and pay off your outstanding loans with it

The key to avoiding a mountain of credit card debt in the first place is to be smart with your spending. Also choose a credit card with a competitive interest rate in case you need to carry a balance some months — it’s better to pay as little interest as possible. For more information about paying off credit card debt or for answers to your credit card questions, call us at 1-800-465-4653 Opens your phone app..