Credit Cards

Destroy Your Credit Card Debt With This Powerfully Simple Approach


Jeff Cuellar



Having credit card debt is a lot like walking through quicksand. The deeper in it you get, the harder it is to get out. Unfortunately, by the time you’re neck deep in it, it’s nearly impossible to get out without taking a massive blow to your credit rating.

If you’ve seen or heard the word “declined” when using your credit card to buy groceries and you need to guess which of your other credit cards still have available credit to make the purchase – you need to get that credit card debt under control!

Thankfully, there’s a powerfully simple way you can get your ass out of the financial quicksand known as credit card debt.

Here’s how:


Here’s What You Should Do

Honestly, you’ll probably laugh when you find out how simple this approach is. There are complex techniques you need to follow.

In fact, the approach is so simple, it only involved 5 steps:

  1. Evaluate and list the balances on each of your credit cards (ideally, the debt-to-credit ratio of each as well, which is explained in the section below)
  1. Determine which credit card you want to pay off first (see section below)
  1. Pay the minimum plus an additional 2X-4X+ the minimum on that credit card to pay it off faster
  1. Once it’s paid off, apply the additional amount you paid on the first card plus the minimum of the first card towards your second credit card
  1. Rinse and repeat until you’ve destroyed your credit card debt

While this approach will definitely cut down your credit card debt in the fastest amount of time, you shouldn’t confuse the words “simple” with “easy” mind you – this approach takes a lot of financial discipline.

Yes, you can use your paid off credit cards again, but be smart about it. Don’t use more than 30% of the card’s debt-to-credit ratio.

*Credit rule to remember: A debt-to-credit ratio of 60% or more will definitely have a negative impact on your credit score. But getting all of your credit cards under 30% will have an immediate positive impact on your credit rating.


Choosing Which Credit Card to Pay Off First

Paying off your credit card debt in the quickest way possible really depends on choosing the right card to pay off first. If you choose the wrong card, you’ll probably pay off your debt eventually – but it’ll take much longer.

So, before you choose, you must first list out your credit cards by their debt-to-credit ratios, which is the credit card balance divided by the credit card limit.

For example, a credit card with a balance of $7,500 and a limit of $10,000 means it has a debt-to-credit ratio of 75% (7,500 / 10,000 X 100 = 75%).

Now, let’s say this is you’ve got 3 credit cards:

  • Credit Card #1: $7,500 balance / $10,000 credit limit = 75% debt-to-credit ratio
  • Credit Card #2: $3,500 balance / $15,000 credit limit = 23% debt-to-credit ratio
  • Credit Card #3: $12,500 balance / $14,000 credit limit = 89% debt-to-credit ratio
  • Total Credit Card Debt-to-Credit Ratio: $23,500 balance / $39,000 credit limit = 60% (not good)

Which do you think should be paid off first?

Immediately, you know that Credit Card #2 is in the best shape as it has the lowest balance and its debt-to-credit ratio is under 30%. DO NOT PAY IT OFF FIRST!

Remember, you’ve got to focus on the cards that are dragging you deeper into credit card debt.

Credit Card #3 is the closest to being maxed out, so it’s definitely the one you want to tackle first. After you’ve used the strategy above to bring its debt-to-credit ration below 30%, you can then take on Credit Card #1.

If you’re in a situation where you have two or more cards that are close to being maxed out, you’ll want to focus on repaying the one with the highest interest rate first.

Once you’ve brought its debt-to-credit ratio below 30%, move on to the credit card with the next highest interest rate and so on.


Final Note: Not everyone has the exact same credit card situation. What might be the right credit card to pay off first for one person might be a different card for another.

Our article Choose the Right Credit Card to Pay Off First goes into greater detail the different strategies for choosing your first credit card to pay off.

If your credit card situation has improved and you want to get a credit card that has a much lower interest rate and better perks, you can compare and choose the right credit card.


Do you have a story about how you managed to tackle credit card debt? Tell us about it on Facebook! And to find even more useful information on everything personal finance, visit MoneySmart today!



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Jeff Cuellar

I'm known by many titles: copywriter, published author, literary connoisseur, ex- U.S. Army intelligence analyst, and Champion of Capua.