How to pay off $60,000 in credit card debt

Medical bills, unemployment, or simple overspending — regardless of how you wound up in credit card debt, the resulting stress can feel overwhelming.

And if you have $20,000, $40,000, or $60,000 in revolving debt, you may wonder if it’s possible to pay it off at all — even with a good income.

Luckily, there are ways to pay off even $60,000 in credit card debt. But you’ll have to take some major steps —and make some sacrifices — in order to accomplish that feat.

How to pay off $60,000 in credit card debt

Let’s be honest: You’ll never be able to pay off $60,000 in credit card debt by merely making minimum payments each month.

Even if you could pay down that debt by only paying the minimum each month, it would take many years (or even decades) and cost you a fortune in interest charges. What’s more, carrying such a high amount of credit card debt could seriously undermine your financial wellbeing and keep you from achieving other financial goals.

If you’re serious about climbing your way out of credit card debt, the first thing you need to do is take a close look at your spending habits and monthly expenses. This will help you get an idea of where you stand, what needs to change, and how much you can afford to throw at your balances each month.

Step 1: Assess the situation

Before you can develop a strategy for your existing debt and avoid creating any new debt, you need to really assess where you are, how you got there, and what you can realistically afford to do.

Here are a few good questions to ask yourself:

• Is your monthly income sufficient to allow you to make payments on $60,000 of debt?
• Are there ways that you can increase your income?
• Can you change the behaviors or avoid the situations that led to $60,000 worth of credit card debt?
• Can you commit to a long-term plan?

You’ll want to gather all pertinent information about your current finances. This includes knowing all your credit card balances to-date, other debt you’re paying on (such as a home mortgage, personal loan, or auto loans), monthly bills (like insurance or utilities), and, of course, calculating your actual take-home pay.

Step 2: Create a plan

Once you know how much you’re spending, how much of your income is already spoken for, and how much debt you actually need to pay off, you can create a plan.

Take your monthly take-home pay and subtract your fixed monthly expenses. For example, things like your mortgage or rent payment, student loan payment, or car payment are predictable, and generally won’t change from one month to the next. That money is spoken for, so you can subtract it from the pot.

Then, set a budget for the rest of your spending. This budget should account for groceries, gas, and other monthly bills like your cable or cell phone service.

Depending on how quickly and aggressively you want to pay off your debt, you may want to create a strict budget. This might mean eliminating fun expenses such as eating out or shopping, or even canceling services that you don’t really need.

Step 3: Set a timeline

Without a timeline, it can be hard to keep your eyes on the prize and stay motivated.

Once you know how much you can allocate toward your credit card debt each month, you can get a good idea of how long it will take to eliminate your debt. This timeline allows you to set goals, track your progress, and know when you’ll be able to make other big financial moves, such as buying a new car.

Depending on your situation and level of debt, a timeline can also be helpful for paying down balances in stages. For example, you may be able to aggressively commit every extra penny toward your debt for six months or a year, but keeping that pace in year two could mean burning out.

Step 4: Put your plan in action

You know how much you owe, how much you make, and how much you’re able (and willing) to put toward your credit card debt. Now it’s time to put that plan into action.

The easiest way to ensure that you follow your new plan is to automate the process. Most credit card issuers will allow you to choose a recurring monthly credit card payment amount, for example. Commit to your plan by setting up this autopay feature right away. Autopay can also help you avoid missed or late payments.

Step 5: Reassess regularly

Evaluate your progress regularly. This will mean analyzing your monthly budget and spending (to see if you can allocate more toward your efforts), watching interest rates (to see if you can save more with a different approach), and tracking how much your overall debt burden has decreased.

Just remember: In the beginning, progress may feel slow. Check in every three to six months or so, but don’t obsess over the process on a weekly basis.

Credit tools to help you pay off credit card debt

Now that you have a plan in place, you can see which tools are available to help you reach your goals. Some can help you reduce your credit card debt in the end, while others may help you get out of debt faster, and some can even accomplish both.

Consolidate with a personal loan

A personal loan is a great way to consolidate your credit card balances into one account, as well as reduce your overall interest charges. You can use a personal loan calculator to estimate how much you’ll pay for a loan, and how much debt you can pay off with one. A personal loan not only simplifies the debt payoff process, but can help you reach your goal faster and for less money.

Pros:

• Lower interest rate. The average credit card interest rate is around 14.75%, while personal loans have an average rate of closer to 9.46%, according to the Federal Reserve. That difference can mean hundreds, or even thousands, of dollars that you get to keep in your pocket.
• Simplified payments. Having just one personal loan payment, vs. multiple credit card payments, may make it easier to keep on top of the bill.

Cons:

• May need a good to great credit score. Personal loans are a form of unsecured debt, just like your credit card balances. Because of this, you’ll need to have a decent credit score in order to get the lowest interest rates and best personal loan terms available.
• Could increase your debt. If you don’t address the situation or habits that got you deeply into debt in the first place, you risk running up new credit card debt on top of the personal loan.

If you want a personal loan to consolidate credit card debt, compare personal loan rates on Credible.

Balance transfer to a 0% APR card

Another option for consolidating debt from multiple accounts and reducing interest payments is a balance transfer credit card with a 0% intro APR offer. Balance transfer cards are generally available to new or existing credit card customers in good standing.

Pros:

• Pay down principal interest-free. The 0% APR could help you pay off your debt more aggressively, without wasting money on interest charges.
• Build credit with good management. Making regular payments could have a positive impact on your credit score.

Cons:

• May come with balance transfer fees. Balance transfers usually involve a fee (most often between 3% and 5% of the amount transferred).
• 0% isn’t forever. If you don’t pay off your balance before the introductory period ends and your APR resets to a higher rate, you could end up facing significant interest charges.

Home equity loans or lines of credit

If you have equity in your home, you may be able to use that to effectively refinance and/or consolidate your credit card debt. Home equity loans and home equity lines of credit, or HELOCs, enable homeowners to access the equity that they’ve built up in their property for a variety of uses, including paying down credit card debt.

Pros

• Low interest rates. Home equity loans, HELOC and even a cash-out refinance, generally will have lower interest rates than credit cards.
• May be easier to get. Since home equity credit products use your home to secure the loan, they can often be easier to get than a personal loan.

Cons

• Puts your home on the line. Home equity loans and lines of credit effectively turn your unsecured credit card debt into debt that is secured by your home, so there’s a lot at risk if you default.
• Reduces your equity. Drawing on your equity for cash to pay off credit cards reduces the amount of equity you have in your home.

9 strategies for paying off credit card debt

If you’re struggling to find enough wiggle room in your budget to aggressively tackle your debt, here are nine strategies you can employ. You may even want to incorporate more than one of these debt management tactics at different stages along the way.

1. Trim expenses

Cutting down on your monthly expenses is an excellent starting point for anyone looking to save more or pay off debt. No matter how much you earn, how much you spend, or how much you owe, it’s always wise to keep as much of your income in your pocket as possible.

Trimming expenses can be simple or complex. You could consider:

• Using coupons at the grocery store
• Eating out less
• Buying second-hand
• Cutting back on streaming services
• Downsizing your vehicle
• Refinancing your home to lower your monthly payment
• Getting rid of cable

Wherever you have potential excess, see how you can reduce it or cut it out to save money. Then, put those savings toward your credit card debt.

2. Boost income

The more you can earn, the more cash you’ll have to put toward getting out of debt.

If possible, see about earning more at work: Ask for a raise, apply for a promotion, or consider switching jobs to boost your pay. If none of that is possible, consider whether a side hustle would help you bring in extra cash each month.

3. Avoid spending creep

Spending creep happens when we adjust our spending (often subconsciously) to match an increase in available funds. Whether you’re earning more or spending less, it can be easier to spend more when you have more wiggle room in your budget.

Avoid this at all costs, either with automation, a strict budget, or another accountability method. It will derail your efforts and make it even harder to tackle your credit card debt.

4. Automate payments

When it comes to forcing financial habits, the "set it and forget it" approach can be helpful.

Automate the more painful money moves by setting up direct transfers into savings and automatically paying a specific amount toward your credit card debt. This prevents you from overspending elsewhere and ensures that you stay committed to your plan each month.

5. Make extra payments

The more you can pay toward your debt, the faster you’ll be done with it. By making extra payments, especially ones that go toward high interest rate cards, you can further boost those efforts.

Put any extra funds toward your balances whenever possible. Earned a little side cash over the weekend? Make an extra payment. Get an unexpected windfall from your parents? Make an extra payment.

6. Use the avalanche method

The avalanche method is a plan for paying off debt and keeping yourself encouraged along the way.

With this method, you’ll pay the minimum payment on all accounts except for the one with the smallest balance. You’ll throw whatever money is left in your budget at that account, paying it off sooner than scheduled and keeping you motivated.

Once that account balance is satisfied, focus your efforts on the next-smallest balance. Rinse and repeat until you’re debt-free.

7. Use the snowball method

The debt snowball method is similar to the debt avalanche, except that instead of focusing on the smallest balance, you’re focusing on the account with the highest interest rate.

This method helps you get out of debt for the lowest total amount, by tackling higher-interest-rate debt balances first. But this may mean it takes longer to get the psychological boost of paying off your first account.

8. Credit counseling

If necessary, consider credit counseling. The right credit counseling agency can help you identify poor financial habits, create a plan for getting out of debt, and even let you know if you need to take more extreme debt relief steps to settle your accounts. They will pay creditors on your behalf, and can negotiate lower interest rates and monthly payments.

9. Bankruptcy

Bankruptcy is a last resort, worst-case option for eliminating debt, but it may be necessary for some. You might go this route if you have significant debt — besides your $60,000 in credit cards — and if your total debt burden is so much that you realistically wouldn’t be able to discharge it any other way.

Be sure to consider all your options before turning to bankruptcy, and research the implications that will follow. Seeking guidance from a credit counselor or financial advisor can be a wise choice if declaring bankruptcy is on the table.

How $60,000 in credit card debt can hurt your finances

Credit cards get a bad rap, but really, they aren’t inherently bad. In fact, wise use of a credit card can help you build a positive credit history and can even earn you rewards on the things you buy anyway.

But credit card debt occurs when you don’t pay your balance in full every month, especially if you’re spending beyond your means. Interest accrues on the balance, which further compounds the problem and makes it easy to spiral into debt that feels out-of-control.

Credit card APRs also tend to be much higher than other types of credit. As we already mentioned, the average credit card interest rate is around 14.75% (though it can be much higher) while the average personal loan interest rate is only 9.46%.

Let’s say you owe $3,000 on a credit card with a 14.75% interest rate. Your debt would take you five years to repay and cost you a total of $4,183. But with a $3,000 personal loan with an interest rate of 9.46%, you’d only pay $3,777 over that same five-year period. That’s a savings of $406!

4 big mistakes to avoid while paying off $60,000 in credit card debt

Prioritizing credit card debt is a wise thing to do, and is a great step toward a better financial future for you and your family. But there are some important things you’ll want to avoid while you’re paying down this debt.

• Avoid new credit card debt. You’ll find it nearly impossible to get out of credit card debt if you’re adding to the pile at the same time. If you find it difficult to control your spending, try using cash or debit cards to avoid taking on new debt while you work on paying off the existing balances.
• Don’t stop saving for the future. It can be tempting to throw every spare penny at your credit card debt, but don’t forget your retirement savings. Due to compound interest, the more you save earlier on, the more your money will grow. Don’t neglect these efforts now.
• Don’t tap your emergency fund to pay for credit card debt. It’s important to ensure that your family always has adequate savings available for unexpected expenses. Keep your emergency fund intact, as tempting as it may be to use that money to pay down debt.
• Don’t use your home equity as a piggy bank. Home equity loans and lines of credit are excellent and convenient products, but they aren’t a free-for-all. Use your home’s equity responsibly. If you work your way through all your equity — or worse, fail to keep up with your new payments — you could jeopardize your financial situation further or even lose your home.

Credit card debt is easy to acquire but daunting to tackle. With the right strategy and dedication, though, you’ll find that it is absolutely possible to get out of debt for good. And, using the right strategies, paying off $60,000 in credit card debt might be faster and less expensive than you thought.