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In the U.S., 75% of consumers carry a credit card balance from month to month. And although the average credit card balance dropped to $5,315 in 2020, plenty of consumers struggle with credit card debt that far exceeds that amount.
On a positive note, it’s possible to pay off even large amounts of credit card debt with the right plan. Below are six tips to help you discover the best ways to pay off $30,000 in credit card debt.
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1. Create a List
It’s smart to begin any debt elimination plan by making a list of the balances you want to pay off. When you create your list of credit card debts, be sure to make a note of the interest rate you’re paying on each account. Depending on the debt elimination strategy you choose, both your credit card balances and your APRs could play important roles in the process.
2. Choose Your Debt Elimination Strategy
Once you have your list of credit card debts, it’s time to choose how you want to tackle those balances. The debt snowball and the debt avalanche are two popular methods you can use to pay down credit card debt.
Each approach starts with a list of your outstanding credit card debt. But these two debt elimination strategies diverge when it’s time to choose which credit card balance to pay off first.
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- The debt snowball method focuses on having you pay the credit card with the lowest balance first. Once you pay off the first account, you move to the account with the next smallest balance on your list and repeat.
- The debt avalanche method has you focus on paying off the credit card with the highest interest rate first. From there, you move to the account with the next highest interest rate and continue the cycle.
With either strategy, you should continue making the minimum payment on all of your credit cards. You might even want to consider automating those minimum payments to avoid mistakes. Accidental late payments could cost you extra money in late fees, penalty interest and potentially damage your credit score.
It’s worth noting that $30,000 in credit card debt might be an unaffordable debt burden for some people to overcome, depending on their financial situations. If you’re struggling to keep up with even the minimum payments on the debt you owe (and you don’t believe budget cuts or additional income sources are an option), you might want to consider debt relief options, such as talking to a credit counselor or a bankruptcy attorney for advice.
3. Update Your Budget
Next, you’ll want to make sure your budget is up to date (or maybe even create a budget for the first time). Having a working budget is an essential step to help you figure out much money you can put toward your debt payoff plan.
As you update or create your budget, list out everything you spend money on each month—from bills to debts to variable spending (like entertainment or clothing purchases). You can gather these details by reviewing your bank and credit card statements for the past several months and averaging out your spending patterns.
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4. Look for Cost-Saving Opportunities
When you understand how you’ve been spending your money, you can look for ways to spend it better. Cutting expenses could free up more cash to divert toward your debt elimination goals. The more money you find in your budget, the faster you can pay off your credit card debt.
Here are a few cost-saving ideas to consider:
- Shop for more affordable auto insurance and homeowners insurance premiums.
- Cancel subscriptions and recurring bills that you can live without (i.e., streaming services, cable, gym memberships, etc.).
- Spend less on non-essentials, like dining out, entertainment and online shopping.
- Track your spending with a budgeting app.
5. Create Additional Income.
Creating additional income is another way to put more money toward your debt. Some people accomplish this goal by working temporary jobs for a few extra hours a week. Side hustles are also becoming increasingly popular, and many of them let you manage your own schedule or even work out of your home. You might even opt to sell unwanted items online through services such as Facebook Marketplace, Craigslist or OfferUp.
If you find ways to create additional money outside of your normal income, you can apply those funds directly toward your debt. The extra work may require a sacrifice, but it could be well worth it if it helps you knock out that mountain of credit card debt sooner.
6. Consider Debt Consolidation
Even with the right plan, paying off $30,000 in credit card debt will take some time. If your credit is in decent shape, you might want to think about using debt consolidation to potentially speed up the process.
The general idea with any form of debt consolidation is to try to secure a lower interest rate and use the new financing to pay off your existing credit card debt. When you do so, more of your money can go toward lowering your principal balance, and less should go toward interest fees.
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There are a number of credit card debt consolidation tools you can use, including:
- Personal Loans
- Balance Transfers
- Home Equity Loans
- Home Equity Lines of Credit
Bottom Line
Paying off $30,000 in credit card debt is a big goal. But unless you’re facing income limitations or other challenges that you can’t overcome, the tips above could help you chip away at your debt until there’s nothing left.
Once you pay off your credit card debt, you’ll also want to develop the habit of paying off your credit card statements in full every month. When you follow this rule of thumb, you can enjoy the many benefits that credit cards have to offer without wasting your hard-earned cash on interest fees.