Getting Out of Credit Card Debt:
Follow These 7 Steps

Getting out of credit card debt is not an easy proposition. Yet, it certainly can be accomplished with dedication and by taking the right steps. Then, when you are free of debt, it can transform your life. Follow these steps to get started.

Credit Card Debt

Step 1 - Mindset and Commitment

You must be mentally ready to make changes in how you spend, how you save, and how you pay your bills. 

If you are not totally committed to getting out of debt – and staying out of debt, chances are likely that you will not succeed. The right mindset is critical to your success.

Step 2 – Cut the Cards

Stop using your credit cards. Cut them up and throw them away. Though, you need to still be able to access your credit card company information and statements.

Without credit cards, you will not be able to accumulate additional debt and must live on the money you earn each month.

This means you need to pay in cash, check or debit card for everything you need (not want). This includes paying your bills, putting food on the table and, yes, paying off your credit card debt. More on that in just a moment.

Step 3 – Detail Income, Expenses and Credit Card Debt

Create three lists by using a spreadsheet software program or pen and paper.

List 1 - Include all your income sources, including pay checks, alimony, pensions, unemployment, Social Security, and other funds. Total these numbers.

List 2 - Detail all your fixed monthly expenses, including your rent or mortgage payment, food, telephone, utilities, car expenses/gasoline, loan payments, childcare and healthcare. Then list variable expenses, such as dining out, small purchases, entertainment, clothing, gifts, etc. Total your fixed and variable expenses.

List 3 - Write down all your credit cards and the name of the issuing bank. For each card, list the amount you owe, interest rate, your credit limit, outstanding balance, and how much you pay monthly. Then, order them based on interest rate from high to low.

Step 4 – Interpreting the Numbers

Getting out of credit card debt requires a keen understanding of your inflow and outflow of money. In other words, consider the old adage - knowledge is power. It certainly applies to getting out of credit card debt.

So, compare the details of your three lists. First look at your monthly income in List 1 relative to your monthly expenses in List 2. Do you come up short each month?

If so, determine the gap – identify how much you need to bring your spending in line with your income. Look for ways to either reduce your variable spending or increase your income.

Next, review List 3 and add up the amount of debt you owe from all of your credit cards.

Step 5­ ­­– Examining Options and Making Contact

Depending on how much you owe in credit card debt, there are three primary options available to make repaying debt more manageable and avoid spiraling into bankruptcy.

Debt Counseling. Credit card debt counseling involves seeking financial assistance from specially trained professionals in the field. Debt counseling includes a variety of services that range from helping you proactively manage loans and payments to effectively managing your finances for the long term. 

*Begin by contacting the National Foundation for Credit Card Counseling at or 800-388-2227. This nonprofit organization has offered free financial counseling, debt management plans, budgeting advice and financial educational services since 1952.

Services for getting out of credit card debt are provided in person, online and over the phone. They are handled through a network of agency organizations that provide no-charge help to more than three million individuals every year.

Debt Consolidation. Credit card debt consolidation is when you combine all of your credit card balances into one card that has the lowest interest rate. Rather than send different checks at different times of the month to pay multiple credit card bills, you send one check to cover your entire financial obligation.

Consolidation may be done by moving balances over to a single credit card with a lower interest rate or by applying for a debt consolation loan.

You can do this yourself or hire a consolidation company to help manage the process. The key is to ensure the interest you owe on the combined balance is less than the overall interest you are paying. In addition, you need to be able to afford your monthly payments.

Debt Reduction/Settlement. A debt reduction or settlement agreement is a contract you work out with individual credit card companies where the amount you owe is reduced and/or forgiven.

This strategy is typically appropriate when you have or are close to the spending limit on all of your credit cards - and you are behind in payments. As with debt consolidation, you can try this yourself, hire an attorney or seek assistance from a consolidation company to speak on your behalf. Note that there will be costs associated with hiring professionals to negotiate for you.

Step 6 – Monitor Credit Reports and Ratings

Check your credit reports and credit rating. This will enable you to know where you stand financially and the type of information that is tracked about your payment history and loans. Your credit rating can make a difference in employer hiring decisions, your ability to rent an apartment or buy a house, or secure a car loan.

Visit to order free reports from the three major credit reporting bureaus – Experian, TransUnion and Equifax. You may also call toll-free 877-322-8228 to get your reports. 

Annually these reports are provided at no charge so do not pay a company to issue them for you, unless you want to look at your reports more frequently (which may not be necessary).

It takes time to improve your credit rating and looking at your reports annually is often sufficient. Also, check for any errors you see in the reports and get them corrected.  Click here for more information about credit reports and credit scores.

Step 7 – Keep the Focus, Stay the Course

To succeed at getting out of credit card debt, perseverance is the key. Resist the urge to get a new credit card even if you are making progress depleting your debt. Continue to use a debit card, cash and checks to pay for your necessities and avoid the nice-to-haves.

Keep spending in check. Monitor your income, expenses and payments continuously to ensure you remain on track and achieve your goal of getting out of credit card debt.

For more on free credit card debt help, click here: Resources

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