How to Pay Off $20,000 in Credit Card Debt

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Key takeaways

Paying more than the minimum each month is key to paying off credit cards.
Payment strategies like snowball, avalanche, or consolidation can help you pay off debt faster and more efficiently.
A lower interest rate can save you thousands and make repayment easier.

Credit card debt is an increasingly burdensome issue for many Americans.

According to Experian, credit card interest rates have reached 23.37% APR on average, and balances have gone up to $6,730. With high interest rates, it’s no wonder credit card debt is growing. The longer it takes to pay your balance, the more interest compounds, and the further you fall into debt. Finding yourself in a $20,000 black hole is not hard.

The best thing you can do is pay off your cards as soon as possible. Of course, that is easier said than done. When you’re struggling to pay $20k in credit card debt, you’ll need a plan. That’s where debt relief programs come in.

Let’s take a look at how to pay off $20k in debt fast.

How long will it take to pay off $20,000 in credit card debt?

The time it takes to pay off $20,000 depends on your interest rate, monthly payments, and strategy.

If you only make minimum payments, it could take decades to repay. And it can cost thousands in interest. Minimum payments are usually only 1% to 3% of your balance or $25. They barely cover the interest and won’t make a dent in your principal.

Let’s say that you owe $20,000 and your interest rate is 23%. If you only make minimum payments of 2%, you would pay over $58,000 in interest. It would take over 49 years to pay off the balance. That is if you do not charge anything else to the card.

Now, let’s say you can afford to pay a fixed rate of $600 per month. You would pay off the balance in about four years and three months. The total interest you’d pay would drop to roughly $10,650.

The more money you can pay each month, the better off you’ll be.

How to start paying off debt

Tackling credit card debt begins with a solid plan.

The first thing you need to do is list everything you owe. Your credit card balances, personal loans, auto loans, and mortgages. Write the amount, interest rate, minimum payment, and due date.

Next, add the monthly payments to know how much you need to pay each month to stay current. You have to face what you owe to solve the problem.

Budget for clearing $20K credit card debt

The next step is to figure out how much you can afford to pay each month.

List your income and monthly expenses. Look over your expenses and see if there’s anything you can cut back on. For instance, eating out, subscriptions, or going to the movies. Throw that extra money towards your bills.

If you’re in debt and need money, consider side gigs or credit counseling. Counselors can help you figure out better budgets.

If you’re wondering, “Should I save or pay off debt?” the answer often depends on your interest rates and emergency savings. Many financial experts recommend saving at least $1,000 first. An emergency fund means you don’t have to borrow next time unexpected expenses pop up.

Pay your bills on time

One of the first things you need to do is learn how to organize your bills and pay them on time every month. Making at least the minimum payment on time will keep your accounts current. You will avoid late fees, penalty APRs, and damage to your score.

Autopay is one of the easiest tricks for anyone figuring out how to pay your credit card bill on time. Setting up automatic payments means you’ll never be late. It’s especially helpful if you have multiple bills with different due dates.

Lower your credit card interest rate

High interest keeps you in debt longer. But here’s something many people don’t know: credit card companies may lower your interest rate if you ask.

A simple call to your card issuer, especially if you’ve been a good customer, can result in a reduced rate. A lower APR will save you money and help you pay off your balances faster. It’s worth finding out.

Be polite and honest about your financial situation. Let your creditor know if you’re facing a temporary hardship such as divorce or job loss. They may be able to help.

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Fastest ways to pay off credit card debt

Finding the quickest way to pay off credit card debt is a top priority for most people. No one wants to owe money.

There’s no single solution that works for everyone. That’s why plenty of debt relief options exist.

Here’s a breakdown of your best moves to get out of debt fast.

Debt snowball & avalanche methods

Snowball and avalanche methods are two classic tricks to paying off credit cards.

The first step of the debt snowball method is to list all your debts from smallest to largest. You focus on paying off the smallest balance first while making minimum payments on the rest. As you pay off each balance, roll that payment into the next smallest debt. The main benefit is the motivation you gain from quick wins.

The debt avalanche method works similarly, but you pay off balances with the highest interest rate first. You will save money in the long run, but it may take longer to see progress.

The debt snowball vs avalanche debate often comes down to emotional wins versus savings. Experts often recommend the snowball. You start strong, build momentum, and stay motivated to keep going.

Debt consolidation loan

Knowing how to consolidate credit card debt can save you hundreds – or even thousands – in interest. One way to do this is to take out a debt consolidation loan. Use the proceeds to pay off your credit card balances. You are left with one monthly payment at a lower APR.

But what if your score isn’t perfect? You can get a debt consolidation loan for bad credit, though interest rates and fees will be higher.

If you’re asking, “Does debt consolidation hurt your score?” know that for many, it causes a small drop at first. The initial drop is because of the hard inquiry. Pay your bill on time, and your score will improve in the long run.

A $20k debt consolidation loan can be a smart financial move. Make sure you’ll save money on interest and pay the loan off as agreed. You’ll be out of debt for less.

Personal loan for credit card debt

A personal loan to pay off credit card debt is another option, but be sure you can afford the loan payments. Look for lenders that offer lower interest rates than your current creditors. You may be able to find a $20,000 loan for bad credit online. Just be sure you’re not digging yourself into a deeper hole by borrowing more than you can repay.

Credit card balance transfer

A balance transfer lets you move your outstanding balance from one or more credit cards to a new card. The new balance transfer credit card has a low or 0% introductory APR. That means you can pay down the balance interest-free during the promo period – usually 12 to 18 months. You will have to pay a fee – typically 3% to 5% of the amount transferred.

When you transfer your credit card balance, you get temporary relief from paying interest. It does not erase your debt. It simply moves it to a card with better terms. Balance transfers are the only way you can pay a credit card with a credit card.

They are an effective way to tackle high interest debt. For it to work, you have to pay off your entire balance before interest kicks in. Also, make sure that the balance transfer fees don’t eat into too much of your savings.

Credit card debt management

A debt management plan is when you work with a nonprofit credit counseling agency to repay creditors. The agency negotiates lower interest rates and waives fees. You make one monthly payment to the agency, which they distribute to your creditors.

A debt management plan will not hurt your credit too much. You may have to close accounts, which can have a negative impact on your credit. Your score will improve as you make payments on time and lower your balances.

Credit card debt negotiation

If you’re behind on payments, it’s time to learn how to negotiate credit card debt. Negotiating can potentially save you thousands in interest. It can also prevent more drastic measures like bankruptcy.

Start by contacting your credit card issuer and explaining your financial hardship. Ask for reduced interest rates, waived fees, or extended payment plans. Be polite, persistent, and document all communications. Be honest about your situation and only agree to a realistic payment plan.

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Credit card debt settlement

Debt settlement is when you or a third party negotiates with creditors to accept a reduced payment. You pay a lump sum, and they forgive the remaining amount. Debt settlement works best if you are significantly behind on bills.

One reason is that debt settlement’s credit score impact is severe. It often requires you to stop paying credit card debt. Missed payments will damage your score. You will have to stop using your credit card as part of debt settlement. Accounts settled for less will be marked as such on your credit report. Future lenders will not look kindly on this.

Besides hurting your score, you will have to pay fees. Debt settlement companies typically charge 15% to 25% of the original balance. The IRS also considers forgiven debt over $600 taxable income.

Is debt settlement worth it? It depends on how dire your financial situation is. It can help you avoid bankruptcy, but it is not a quick fix. Your score will suffer, you may owe the IRS money, and there’s no guarantee that your creditors will settle.

Credit card debt forgiveness

Rarely, creditors may forgive outstanding balances because of hardship. Forgiveness can happen in cases of disability or severe financial distress. It’s not common.

Frequently asked questions

1. Why is it more difficult to get out of debt when only paying the minimum payment?

The minimum payment mainly covers interest, not the actual balance. You will rack up more interest, making it harder to pay off the full amount.

2. How to get help with credit card debt?

Go to a nonprofit credit counseling agency and ask about a debt management plan. A DMP can help you repay what you owe at a lower interest rate. Look for an agency accredited by The National Foundation for Credit Counseling (NFCC).

3. Is $20,000 in credit card debt a lot?

Yes, $20,000 is a significant amount. It can take years to pay off without a solid plan.

4. How to get out of debt without ruining your credit?

You have to make at least the minimum payment on time every month to avoid damaging your score. Choose one card to pay off first. Throw any extra money at that balance. Once you pay it off, move on to the next one. You will pay off your cards without hurting your credit.

5. How to pay off $20,000 in one year?

To pay off $20,000 in one year, you’ll need to pay about $1,700 per month. Cut non-essential expenses and look for ways to increase your income. Consider consolidation loans or balance transfer cards to save on interest.

Bottom line

Getting out of a $20,000 hole isn’t easy – but it’s absolutely doable. The first step in learning how to get out of credit card debt is to figure out a realistic plan. The second step is to pay as much as you can each month. The more you pay, the faster you’ll be debt-free.

The smartest way to pay off credit card debt is to consistently pay more than the minimum. What strategy you use is up to you. Find the payment method that motivates you to keep going. Try the snowball or avalanche methods, take out a consolidation loan, or enroll in a DMP.

There will be sacrifices along the way, but the long-term relief is worth it.

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Rachel Alulis

Rachel Alulis has been the lead editor for Moneyfor’s credit cards team since 2015 and for the financial rewards team since 2023. Before joining Moneyfor, Rachel worked at USA Today and the Des Moines Register. She then established a successful freelance writing and editing business specializing in personal finance. Rachel holds a bachelor’s degree in journalism and an MBA.

How to Pay Off $20,000 in Credit Card Debt

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