10 Ways To Shave Hundreds Off Your Credit Card Balance in the New Year
Written by
Caitlyn Moorhead
Edited by
Ashleigh Ray
Commitment to Our Readers
GOBankingRates' editorial team is committed to bringing you unbiased reviews and information. We use data-driven methodologies to evaluate financial products and services - our reviews and ratings are not influenced by advertisers. You can read more about our editorial guidelines and our products and services review methodology.
20 Years
Helping You Live Richer
Reviewed
by Experts
Trusted by
Millions of Readers
Ready to tackle your credit card debt in the new year? If high-interest balances have been weighing you down, now is the perfect time to take control and start fresh. Paying off debt doesn’t have to feel overwhelming. Small, strategic steps can add up to big savings.
From prioritizing high-interest cards to negotiating lower rates and finding creative ways to boost your income, these practical tips will help you shave hundreds off your balance and regain financial freedom. Here are 10 smart ways to make it happen.
1. Break Down Your Goals and Start Small
The first thing you should do is take a look at the amount you need to pay off and break it down. For example, if you owe $2,000 and you give yourself eight weeks to pay it off, you will need to allocate $250 per week toward your debt. If you have a large amount of debt, break that number you owe down into smaller, more attainable weekly numbers.
2. Use the ‘Avalanche’ Method To Pay Off Debt
If you’re carrying debt on multiple credit cards, consider using the “avalanche” method and focus first on the card with the highest interest rate. As you target the debt with the highest interest rate, continue to make minimum payments on any other debts. Once this debt is paid off, you move on to the next piece of debt with the highest interest rate.
This strategy helps you limit how much interest you accrue over time. It’s all about reduction, so as you get rid of the heaviest hitters, your debt repayment will become more and more manageable.
3. Or Try the ‘Snowball’ Method
The “snowball” method focuses on paying off credit cards with the lowest balances first instead of the highest interest debt. This strategy requires you to make the minimum payments on all debts except the one with the lowest balance, to which you apply all of the remaining monthly budgeted amount.
Once that account is paid off, move on to the next smallest, and so on. This helps you stay motivated by seeing the rapid initial progress, making it easier to maintain that momentum. The difference between the avalanche and snowball method is usually relatively minimal mathematically, but keep in mind, the debt avalanche produces a quicker result.
4. Ask Your Card Issuer To Reduce Your Interest Rate
Another way to reduce how much you owe is to convince your credit card issuer to reduce your interest rate. Try calling a representative and tell them you’re considering a balance transfer card but would prefer to maintain this card if the interest rate were lower. If you have been in good standing for at least a year and have no missed or late payments, they may be willing to lower the interest rate rather than lose you as a customer.
5. Stop Using All Credit Cards That Have Balances
Using a credit card while paying it off is like scooping water out of a boat with a leak in it. This may sound difficult, but try your best not to use your credit card at all while paying it off. Counterintuitive as it may feel, take it out of your wallet, remove it from the saved payment option on online sites or even cut it in half. This will prevent you from adding to your balance and taking even longer to pay it off.
6. Dedicate a Percentage of Every Paycheck Toward Debt
Calculate your monthly net income (which is your monthly income minus your monthly expenses) to see exactly how much you can dedicate each month to paying off your credit card debt. You could do a version of the 50/30/20 budgeting rule that generally allocates 50% of your paycheck to needs, 30% to wants and 20% to savings, but instead you could do the 20% to debt repayment until it’s paid off in full.
Consider setting up an automatic transfer so that a set amount of each paycheck goes toward paying down your balance.
7. Use Budgeting Software or Apps
Budgeting software and apps let you see the amount of money you have coming in and going out and can help ensure you’re keeping up with your credit card debt repayment goals. Awareness is the most important part of knowing just where your spending habits are hurting you.
Tracking your expenses and budgeting will help you prioritize your dollars to live a more joyful life, help you use credit cards responsibly and help you save for your goals.
8. Earn Extra Money To Pay Off Balances Quicker
Consider freelancing or finding a side hustle you enjoy to increase the amount of money you’re bringing in every month. This extra cash can help you avoid swiping your credit cards and help you pay down your debt faster. You may even be able to dedicate 100% of that income toward debt repayment.
9. Spend Less and Put the Extra Money Toward Your Debt
Some monthly expenses are fixed, but there are others you have control over, like your food budget. Try adjusting your habits so that you can spend less and save more. For example, cut your food budget by avoiding impulse buys at the grocery store and choosing generic over name brands. Doing this could leave you with extra funds at the end of the month that you can put toward paying down your credit card balances.
10. Make More Than the Minimum Payment
It will be hard to pay off your balance if you’re only making the minimum payment each month. Try to bump that up a bit — even by an extra $10 to $20 per month — especially on cards where the annual percentage rate is highest. You could even try paying more often than once a month.
Gabrielle Olya contributed to the reporting for this article.
More From GOBankingRates
