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10 Best Ways to Clear High Credit Card Debt

10 Best Ways to Clear High Credit Card Debt June 4th, 2018

Are you considering paying off your credit card balances? If so, there’s no time to waste. Literally, every 3-4 months over the last year, your credit card debt has been getting more and more expensive.

Interest Rates Will Continue Rising Into 2019

Interest rates have increased eight times since the 2008 financial crisis, and three times in 2018 alone. Plus, the Federal Reserve is expecting to increase its federal fund’s rate again in December 2018, for the fourth time this year! Is it ever going to stop? Well, if you choose one of these ten debt relief plans as of today, you will be able to stop paying more in interest immediately.

The reason that they keep raising rates is due to “a healthy economy and to balance inflation”, but for credit card borrowers all it means is that their debt is getting more expensive every time rates go up.

10 Best Ways To Clear High Credit Card Debt


1. Debt Snowball Method:

What’s the better way to pay off debt, the debt snowball or avalanche method? 

The debt snowball method of paying off debt “proves to be most effective, according to new research published by the Harvard Business Review.”

Debt Snowball Method - Quickest Way to Pay off Credit Card Debt

Think about how you make a snowman for a moment:

You have to pack that original small snowball tight, so it’s hard, and then simply start rolling it. As you roll the snowball it picks up more snow and “will quickly grow in size”. The snowball “quickly grows” bigger and bigger in size, and eventually becomes enormous! “Quick”, is the key word here. Quick results … Quickly getting out of debt … and this same concept occurs when paying off credit card debts. You want to quickly pay off your first debt so that you can quickly see results and quickly start accumulating more available funds.

With the debt snowball method, you aggressively work towards paying off the credit card with the smallest balance first because that’s how you will see the quickest results. I hate to use the same word more than once per blog post, but I just had to stress the word “quick” when talking about the debt snowball method.

Immediately after that initial credit card balance gets “paid in full”, you’ll start to pick up momentum, and your available cash flow will increase just like the snowball growing in size. Use that extra money towards paying off the second smallest debt. Imagine rolling a snowball, and seeing it double in size, eventually, after you pay off half of your debts you will have double the amount of cash-flow available to use towards paying off your next debt.

As your debts are paid off one by one, your available cash flow will increase. You’ll continue to have more available to use when attacking the next credit card balance.

The debt snowball method of paying off debt was invented by Dave Ramsey. Here’s an infographic created by the master himself!

Dave Ramsey infographic on how to do the debt snowball method

image credit: Dave Ramsey,, 11/04/2018

A useful first step in advance of using this debt snowball approach is to create a budget analysis worksheet, which is basically just putting all expenses in one column and income in another column right next to it so that you can see all of your bills clearly. This will provide a visual image of where your money is going, making it easier to find non-essential expenses that can be reduced or eliminated. In the beginning, it’s going to be hard to find any extra money at all, right? So by writing out all of your expenses and how much you pay on each expense every month, now you can find ways to cut down your expenses in order to find extra money so that you can pay more than that minimum payment towards your first smallest debt. (example: lower the electric and heat bill, use coupons when shopping to save money at the grocery store, remove the HBO that you never watch, and cancel that old subscription that you forgot was billing you each month).

This method works by using psychological principles. When a person achieves a goal, like paying off that first credit card debt – the brain releases dopamine, and it feels good. Another benefit of the debt snowball method is that your credit utilization ratio and credit score simultaneously improve each time a credit card balance gets paid in full.

2. The Debt Avalanche

The debt avalanche method is similar to the debt snowball method, but the difference with the debt avalanche is that you order your debts by their interest rate. Instead of paying off your smallest balance first, you would pay off the credit card balance with the highest interest rate first, the one costing you the most.

By paying off your most expensive accounts first, you can get out of debt faster and maximize your savings. This option requires more will-power than the debt snowball method because it takes longer to get results, but if you stick it out and use this option to become debt free, you will end up saving more money in the end than if you were to use the debt snowball method.

You may decide to use a combination of the debt snowball and avalanche method, using the debt snowball method to motivate you. For example, pay off all of your balances that are $1,000 or less using the debt snowball method. After quickly clearing these first few small debts and getting that feeling of gratification, then switch to prioritizing your debts by the interest rate and using the debt avalanche method.

At they offer an excellent Debt avalanche calculator tool to help you get out of debt faster with this route.

3. Balance Transfer Cards:

“Low Rate Balance Transfers | 0% Intro APR. Apply Now!” 

Wow, that’s enticing.  … until you read the fine print; “after 12-18 months the introductory rate comes to an end, and the interest rate rises to 19.9%”. Balance transfer cards also come with up-front fees. These fees range from 3%-5% of the amount of credit card debt getting transferred. If you move $10,000 onto a balance transfer card that charges a 4% fee, that’s $400 in up-front costs.

When is a balance transfer card worth it?

If you can afford to pay the balance “in full” within the 12-18-month introductory period, you could end up paying low to no interest and only a $400 fee. Shop around for a balance transfer card that comes with low costs and only go this route if you can afford to pay the balance in full within the introductory rate period.

At, you can find balance transfer cards that come with a 0% introductory APR on balance transfers for up to 18-months.

Keep your credit card accounts open after paying off the balances. If you close a credit card account, your credit score will decline because your credit utilization ratio will be negatively affected and the length of your credit history will be reduced.

4. Home Equity Line of Credit:

When using a home equity line of credit to pay off credit card debt you’re taking on considerable risk. You’re swapping an unsecured debt for a secured debt. If for whatever reason you can’t afford to continue paying your scheduled monthly payments on the home equity line of credit, you could end up losing your home over a credit card debt, wherein you see the risk.

However, this is still one of my favorite tools for clearing credit card debt. The value of using a home equity line of credit to pay off credit card debt is that you’re eliminating high-interest credit cards, and replacing them with a low-cost home equity line of credit.

According to, 5.56% is the average interest rate on a home equity line of credit as of May 2018, significantly lower than the average interest rate on a credit card.

5. How to Negotiate With Bank to Reduce Interest Rate

Negotiating directly with your creditor to reduce the interest rate and monthly payment can be a relatively simple and practical option. You may be able to convince a creditor to lower your interest rate permanently.

For example; one of my close friends recently contacted Chase bank and requested that they lower his interest rate.

“I’ll be closing my credit card account at Chase and switching to Capital One,” he said, “who offered me a 12% rate on a similar card.”  He continued, “I’ve been a loyal client for six years now, and it would be mutually beneficial for you to lower your interest rate so that I can stay with Chase.” Chase quickly approved the request and permanently lowered his interest rate from 15% to 12%.

All it took was the initiative to make a quick phone call.

6. Credit Card Hardship Program with Bank

In some cases, you may only be able to get a temporary reduction in the monthly payment, but if you’re going through a financial hardship, that may be your best solution.

To be considered for a bank’s credit card hardship program, you must be behind on your monthly payment, but not to the point where your credit report is negatively affected.

Steps to get approved:

  1. The trick is to call your creditor in 7-10 days after you miss the monthly payment. Late payment history doesn’t get reported to the credit reporting agencies until you’re more than 29-days past due.
  2. To strengthen your case, send the creditor a copy of your budget analysis, a financial hardship letter and evidence to validate your reason for needing a lower payment, before calling them.
  3. When calling your creditor, request to speak to a supervisor because they have the authority to reduce your monthly payment. Let the supervisor know that you’re calling to see if they can temporarily lower your monthly payment. Go over the fact that you could not afford to make your last monthly payment and explain why. Include the details of your financial hardship. Make sure to keep your story in line with what you stated in the hardship letter. Also, reassure your creditor that your financial hardship is only temporary and provide an estimate for how long you’ll need the relief.
  4. The supervisor will ask you a series of questions about your income. At that point, verify that they received your budget analysis, hardship letter and whatever documentation you sent.

You’ll be rejected from a bank’s credit card hardship program if your income is too low, due to insufficient income. If your income is too high, they may not consider you to have a sufficient financial hardship. There is no set number, but as a general rule of thumb, consider showing that you could reasonably afford about half of the projected monthly payment that is currently required.

7. Consumer Credit Counseling

After completing your budget analysis, if you find that you only have enough money to make minimum monthly payments or less, you may want to seek a debt relief program. There are several advantages to participation in a debt relief program.

A consumer credit counseling (CCC) plan may lead to lower interest rates and the consolidation of several of your monthly payments into an easier to deal with, more manageable single payment.

It’s common to see 25% interest rates, get reduced to 8%-10%. Consumer credit counseling can lead a person out of credit card debt within 4-5 years, versus 9-15 years when paying minimum payments.

Although participation in CCC has a minimal effect on a person’s credit score, there may be some adverse consequences to consider.

For example, anytime you change the original terms on your credit card contract there’s an adverse effect on your credit rating, and with consumer credit counseling a third-party notation will be notated on your credit report.

8. Debt Settlement Services

If your credit card debt is with a collection agency, debt settlement can reduce the balances to around half, before company fees.

Debt settlement programs can offer a solution to your debt that is affordable, and it provides you with a viable option other than bankruptcy.

Debt settlement services can help a person to pay off all of their unsecured debt in under 48 months.

A potential downside to debt settlement, especially dealing with higher debt amounts, is that you may receive a court summons or a Form 1099 from the IRS listing the amount of debt relief you received as ordinary income, that you would then be obligated to pay taxes on.

9. Debt Validation

Before signing up for a debt settlement program, consider debt validation. The Fair Debt Collection Practices Act (FDCPA) gives you the legal right to dispute a third-party debt collection account through debt validation, forcing the collection agency to prove that they have the legal authority to collect on a debt.

A recent article in stated; “Billions of dollars in student loans may be wiped out for tens of thousands of borrowers in the US because a lender didn’t keep track of the paperwork verifying ownership of the loans.”

When a debt collection company can’t prove, a person owes the debt; the debt becomes legally uncollectible – where the collector must stop collection on the debt and subsequently can no longer lawfully report the debt on a person’s credit report.

Debt Relief Program Infographic (Pros vs. Cons)

How Credit Card Debt Relief Programs Work & Affect Credit Scores?

10. Bankruptcy for Credit Card Debt:

Bankruptcy should be a last resort because of the long-term damage and scars that would get inflicted on your credit report. The only reason bankruptcy made this list is because bankruptcy can be an effective weapon to deal with lawsuits.

Bankruptcy can stop a credit card lawsuit and discharge a person’s obligation to pay back the debt. If you have equity in your home, bankruptcy can protect your home in some cases.

If a business is getting served with multiple lawsuits, chapter 11 bankruptcy can wipe these debts away without affecting the business owner’s credit.


About the author:

Paul J Paquin is the CEO of Golden Financial Services, a national debt relief company that’s helped thousands of consumers achieve debt freedom and credit card relief. Paul integrates his experiences and insights from Golden Financial Services, into his writings, sharing solutions to the everyday financial challenges that Americans face. He’s passionate about empowering consumers with the knowledge needed to transform their finances and take control of debt. He’s created numerous guides on debt related subjects; a few of the most popular include, “A Guide to Understanding Unsecured vs. Secured Debt” and “The Ultimate Guide on How to Get Student Loan Forgiveness”–published on

Paul is also a renowned marketing guru, using SEO as a vehicle to transport debt relief information directly to the homes of the millions of Americans who struggle to escape their debt problems, as they rigorously search for answers on Google. In 2018, he submitted “7 Killer Steps on How to Win at Local SEO”, to The post ended up getting 571 social media shares. You can view some of Paul’s latest blog posts at, and contact him at

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