Dear Money Mentor: How do I begin paying off credit card debt?

May 30, 2022

Establishing credit can help build your future, but credit card debt can be overwhelming to manage. Here are some solutions to pay off credit card debt, as well as tips to further develop successful spending habits.


Dear Money Mentor is designed to answer common consumer banking questions and offer guidance to improve financial wellbeing. Read on for tips and expert advice from Nancy Smock, branch manager, and Anthony Marengo, branch assistant manager.

If you have credit card debt, you aren’t alone. According to the Federal Reserve Board's latest Survey of Consumer Finances, the mean credit card balance is $5,700 per household.1 But credit cards are not all bad. When used correctly, they can help you establish a positive credit score, enabling you to purchase items like homes and cars.

If you’re ready to have a healthy relationship with plastic, here are six strategies to pay off debt. Plus, four tips for developing successful future spending habits.


Strategies for paying off credit card debt

1. Talk to a banker about settling credit card debt

Bankers have seen it all during their careers, so there is no need to be embarrassed about credit card debt. If you feel like you’re falling behind on payments, don’t wait to bring a trusted financial professional into the fold. The sooner you ask for help, the easier it is to course-correct.

2. Make use of the debt avalanche method

Let’s say you have three credit cards. One with a 5 percent interest rate, one with a 12 percent interest rate and one with a 24 percent interest rate. Even if your lowest interest rate card has a more significant balance, pay off the card with the highest interest rate first. Why? It will rack up debt faster. As soon as that first card is paid off, move monthly payments to the second-highest interest rate card. And so on. This is known as debt avalanche.

3. Never miss a credit card minimum payment

If you’re implementing the avalanche approach, note that you shouldn’t neglect other cards while focusing your debt-paydown efforts on one. Make sure you’re at least paying the minimum monthly amount on all credit cards to avoid missed and late payments. Those are a huge threat to your credit score.

4. Pay more than the minimum credit card payment

When only paying the minimum amount due, most of your monthly payment will go toward interest. It won’t actually put a dent in the actual debt you owe. Even if you can only contribute an extra $5, it will help pay down the principal balance.

5. Conduct a credit card balance transfer

As a rule of thumb, keep your credit utilization at around 30 percent. (This is the amount you actually use compared to how much is given to you.) Once you’re hitting the 50 to 60 percent mark, take more drastic steps to get debt under control.

If you qualify for a balance transfer, all of your credit card debt can be loaded to a new credit card. Doing so can offer an introductory promotion of lower or zero percent interest rate for a specified time, such as 12 months. Accordingly, it allows your monthly payments to be more effective in paying down debt. This is because more (or all) of the amount goes toward the principal instead of interest.

6. Consider a credit card consolidation loan

Another option is to roll all your credit card debt into a personal loan. An appealing option to many, for the interest rate will be fixed and typically lower than a credit card. You’re able to see when the loan will be paid off based on the term length you choose and you’ll know exactly how much you need to pay every month.


Once you’re out of debt

1. Avoid closing credit cards

If you have difficulty resisting the temptation to swipe, you should completely close a card once you pay the debt, right? Wrong. That’s because the length of your credit history plays a factor in your credit score. The longer your credit history, the better. Cut up the card or lock it away if you have to, but never close the account. The exception to this rule comes with the accumulation of too many cards, if you feel you have an excess amount of credit accounts open you should contact your financial advisor to evaluate your situation. They will be able to help you find the right balance.

2. Turn credit card payments into savings

Don’t fall into a trap of thinking you have all this extra money to spend after the debt is paid off. Instead, take the amount you were putting toward your credit card and save it—whether for short-term or long-term financial goals.

3. Increase your credit limit

This may seem counterintuitive if you’re prone to acquiring debt but ask your creditors to raise your limits. It can actually improve your credit score. This is because the more credit you’re approved for and don’t use, the more responsible you look to lenders.

4. Set a limit for yourself

As mentioned earlier, you should never exceed that 30 percent credit utilization mark. But if that’s even too high for your comfort, set a personal limit you know you can pay every month.


Find more resources on ways to manage your debt.


1 “Changes in U.S. Family Finances from 2013 to 2016: Evidence from the Survey of Consumer Finances.” Federal Reserve Bulletin, Vol. 103, No.3, September 2017.

Related content

Common small business banking questions, answered

3 signs it’s time for your business to switch banks

Colleges respond to student needs by offering digital payments

Higher education and the cashless society: Latest trends

Luxury jeweler enhances the digital billing and payment customer experience

U.S. Bank asks: What do you know about credit?

Automate accounts payable to optimize revenue and payments

6 timely reasons to integrate your receivables

3 ways to make practical use of real-time payments

Changes in credit reporting and what it means for homebuyers

Good debt vs. bad debt: Know the difference

6 essential credit report terms to know

Webinar: Mortgage basics: What’s the difference between interest rate and annual percentage rate?

Know your debt-to-income ratio

How jumbo loans can help home buyers and your builder business

White Castle optimizes payment transactions

How to accept credit cards online

Practical money skills and financial tips for college students

Using merchant technology manage limited staffing

Myth vs. truth: What affects your credit score?

5 tips to use your credit card wisely and steer clear of debt

P2P payments make it easier to split the tab

Ways prepaid cards disburse government funds to the unbanked

5 tips to help you land a small business loan

What’s your financial IQ? Game-night edition

Increase working capital with Commercial Card Optimization

Government billing survey: The digital transformation of the payment experience

Personal loans first-timer's guide: 7 questions to ask

Be careful when taking out student loans

What kind of credit card does my small business need?

Top 3 ways digital payments can transform the patient experience

5 reasons why couples may have separate bank accounts

Want AP automation to pay both businesses and consumers?

What types of credit scores qualify for a mortgage?

How Everyday Funding can improve cash flow

What is a good credit score?

Checklist: What you’ll need for your first retail pop-up shop

Hybridization driving demand

Money Moments: How to finance a home addition

Webinar: CRE technology trends

Escheatment resources: Reporting deadlines for all 50 states

Private equity and the full-service administrator

Dear Money Mentor: How do I begin paying off credit card debt?

When your spouse has passed away: A three-month financial checklist

Managing the rising costs of payment acceptance with service fees

Webinar: Digitizing receivables to transform B2B rent payments

Understanding and preparing for the new payment experience

How a small business is moving forward during COVID-19

When to consider switching banks for your business

Unexpected cost savings may be hiding in your payment strategy

Dear Money Mentor: What is cash-out refinancing and is it right for you?

How do interest rates affect investments?

How to use credit cards wisely for a vacation budget

Automate escheatment for accounts payable to save time and money

3 awkward situations Zelle can help avoid

How to build and maintain a solid credit history and score

How to build credit as a student

Evaluating interest rate risk creating risk management strategy

How to choose the right rewards credit card for you

Restaurant survey shows changing customer payment preferences

Webinar: CSM corporation re-thinks AP

Digital Onboarding helps finance firm’s clients build communities

Should rising interest rates change your financial priorities?

5 Ways to protect your government agency from payment fraud

Improve government payments with electronic billing platforms

Authenticating cardholder data reduce e-commerce fraud

Webinar: Mortgage basics: How much house can you afford?

These small home improvement projects offer big returns on investment

Is it the right time to refinance your mortgage?

Dear Money Mentor: How do I set and track financial goals?

Credit: Do you understand it?

4 benefits to paying foreign suppliers in their own currency

Benefits of billing foreign customers in their own currency

Enhancing the patient experience through people-centered payments

5 unique ways to take your credit card benefits further

Improving your credit score: Truth and myths revealed

Overcoming the 3 key challenges of a lump sum relocation program

Common unexpected expenses and three ways to pay for them

Myths vs. facts about savings account interest rates

Leverage credit wisely to plug business cash flow gaps

How to use debt to build wealth

Credit score help: Repairing a bad credit score

Housing market trends and relocation impact

Tap-to-pay: Modernizing fare payments pays off for transit agencies and riders

Streamline operations with all-in-one small business financial support

How COVID-19 is transforming healthcare payments

Payment industry trends that are the future of POS

What’s a subordination agreement, and why does it matter?

Modernizing fare payment without leaving any riders behind

Access, flexibility and simplicity: How governments can modernize payments to help their citizens

Should you get a home equity loan or a home equity line of credit?

Webinar: Approaching international payment strategies in today’s unpredictable markets.

How to establish your business credit score

How mobile point of sale (mPOS) can benefit your side gig

How you can take advantage of low mortgage rates

4 questions to ask before you buy an investment property

Is a home equity line of credit (HELOC) right for you?

10 uses for a home equity loan

How to use your home equity to finance home improvements

Webinar: Mortgage basics: How does your credit score impact the homebuying experience?

How to save money in college: easy ways to spend less

5 steps to selecting your first credit card

7 steps to keep your personal and business finances separate

Your quick guide to loans and obtaining credit

How to spot a credit repair scam

Test your loan savvy

Should you give your child a college credit card?

What applying for store credit card on impulse could mean

How to improve your credit score

Decoding credit: Understanding the 5 C’s

5 tips to use your credit card wisely and steer clear of debt

ABCs of APIs: Drive treasury efficiency with real-time connectivity

Hospitals face cybersecurity risks in surprising new ways

How real-time inventory visibility can boost retail margins

How liquid asset secured financing helps with cash flow

Can you take advantage of the dead equity in your home?

Rethinking common time management tips

Business credit card 101

Do I need a credit card for my small business?

How to apply for a business credit card

How to establish your business credit score

Digital trends poised to reshape hotel payments

Three healthcare payment trends that will continue to matter in 2022

The surprising truth about corporate cards

Safeguarding the payment experience through contactless

ABCs of ARP: Answers to American Rescue Plan questions for counties

Government agency credit card programs and PCI compliance

What type of loan is right for your business?

3 benefits of integrated payments in healthcare

Webinar: AP automation for commercial real estate

COVID-19 safety recommendations: Are you ready to reopen?

How to improve digital payments security for your health system

Webinar: Robotic process automation

Webinar: CRE treasury leader roundtable

Start of disclosure content

Loan approval is subject to credit approval and program guidelines. Not all loan programs are available in all states for all loan amounts. Interest rate and program terms are subject to change without notice. Mortgage, home equity and credit products are offered by U.S. Bank National Association. Deposit products are offered by U.S. Bank National Association. Member FDIC.