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If you’re feeling overwhelmed by credit card debt, you’re not alone. As of June 3, US banks held $762 billion in outstanding credit card debt on their balance sheets. And while that’s actually a significant drop from the beginning of 2020, a lot of people are using credit cards to make ends meet during the pandemic.

It often feels easier to avoid thinking about your credit card debt. It can be overwhelming. But if you have an idea about how you’re going to pay it off, even in the long run, it’ll be easier to deal with and less of a burden. And believe it or not, you can create a plan to pay off your debt with just four steps.

Why is my credit card debt killing me?

One of the reasons credit card debt is so unpleasant is because it seems like it never goes away. No matter how many times you make a monthly payment, the balance that’s left seems insurmountable. Why is that, anyway?

Well, there are two reasons. The first is that the interest rates on most credit cards are, frankly, egregious. I just randomly grabbed the latest monthly statement for one of my cards and the interest rate on it is 15.99%.

Compare that to the average 3.54% interest rate on a conventional 30-year fixed rate mortgage right now, or even the average car loan interest rate (about 8% in the fourth quarter of 2019, according to LendingTree), and you can see how much drastically worse credit card interest is.

“Using 16% as an example, if you have the average household credit card debt ($5,700 according to the Fed) and you only make minimum payments, you’ll be in debt for 23½ years and will owe a total of $12,760,” explained Ted Rossman, an industry analyst at CreditCards.com. “That’s bad enough, and the math is even worse at higher interest rates.”

But there’s a second problem, and that problem is called compounding interest. When you first rack up debt and a bank starts charging you interest on it, at first you’re just paying interest on the money you spent. But you’ll soon be paying interest on both the debt and the existing interest.

“When you carry a balance from month to month, interest is charged on a daily basis and it compounds daily, meaning that the interest that you’re charged on one day will also become a part of the balance accruing the next,” explained Kara Stevens, founder of the personal finance and lifestyle blog The Frugal Feminista.

And if you miss a monthly payment? “You’re charged late fees for inability to pay on time, which then becomes a part of your new balance and accrues interest,” said Stevens.

Now you’re paying interest on not only your balance, but also on late fees and interest. And if you miss another payment, you’re paying interest on interest on interest. And soon enough it snowballs into an insurmountable mountain of debt. So how do you break this cycle?

Step 1: What’s your worst debt?

If you have more than one credit card, you need to start with a list of all your balances,.
If you have more than one credit card, you need to start with a list of all your balances,.
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The first step is to make a list of all your credit card balances and the interest rates you’re paying on each. You’ll find both of these numbers on your most recent credit card statements. If you only have one credit card with a balance, this will be easy. But many people have more than one card, so write down both numbers for each account.

Now, look at your list, because one of your credit cards is worse than all the others — the one with the highest interest rate. This is the account you’re going to focus on first, though you should make sure you continue to make at least the minimum payments on the rest of your accounts so they stay current.

Step 2: Apply for a new credit card with a balance transfer offer

You might think it’s crazy to apply for another credit card when you’re already having problems with the ones you have. But you’re not getting a new credit card to go out and shop with it. Instead, you’re going to transfer your worst debt to this new card.

Why? Because on some credit cards, banks offer special introductory interest rates on balance transfers when you first open them. With these offers, you’ll be charged no interest on your existing debt when you transfer it from your old credit card to your new one for anywhere from 12 to 21 months, depending on the card.

“A 0% balance transfer credit card is my favorite tip for getting out of debt quickly at the lowest possible cost,” said Rossman. “You can roll a bunch of debts together and save a lot of money on interest.”

Where do you find these balance transfer offers? We’ve put together a list of our top choices in our guide to the best balance transfer credit cards of 2020.

Once you get a new card and transfer your debt over to it, you’ll be paying 0% interest on that balance instead of whatever sky-high rate you had before. And if you still have extra room on your new credit card, don’t hesitate to go back to your list and transfer the next-worst debt over as well. The more of your debt you can get at 0% interest, the better.

Step 3: Put the extra money toward your other cards

Once you pay off one credit card, you
Once you pay off one credit card, you'll gain momentum, making it easier to pay off the others.
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Because the minimum payment on your transferred balances is now lower than it was before (since there’s no interest added), you can take the extra money you were previously paying each month and add it to the minimum payment on one of your other credit cards instead. That will help you get those other balances paid off so you’re not paying so much interest.

Which card should you pay off faster? There are two schools of thought on this. Some people say you should put the extra money toward the remaining card with the highest interest rate, which both Rossman and Stevens refer to as the “avalanche” method. This certainly makes sense, as it means you’re getting rid of your most expensive debt first.

But others prefer putting the extra payments toward the remaining card with the smallest balance. Stevens calls this the “debt domino” approach. “You order your credit card debt from smallest balance to largest, independent of interest rate, and attack the smallest debt first to get a quick win,” she explained. “Seeing the total number of balances go down can be a real ego-boost and motivator to keep going. I used this approach when I was trying to stay motivated when I was attacking debt.”

And once one of your balances disappears, “you’ll gain momentum, like a snowball rolling downhill, and see immediate results that will fuel you to pay down your debt even faster,” said Rossman.

Paying off your smallest balance first also has an added advantage: You can then take the money you were paying each month toward that debt and add it toward paying off the next smallest balance as well. Now you’ve got the snowball effect working in your favor — the quicker you pay off one debt, the more money you have left over and the easier it becomes to pay off the next one.

Of course, if you managed to get all your existing debt onto your new balance transfer card, then the simple trick is to keep paying all the extra money to that card instead of only making the minimum payment. Ideally, you want to get rid of the transferred debt before your introductory rate runs out, but if that’s not possible, at least reduce the balance so you have less of a problem to deal with later.

And if your credit isn’t good enough right now to get a new balance transfer credit card, it’s okay. You can still do this step by paying a few extra dollars each month toward your smallest current balance. Every little bit will help get rid of that debt, and you can always apply for a balance transfer credit card the line when your credit has improved from paying down your existing cards.

Step 4: Close or convert old cards that are costing you more than they’re worth

Finally, once you’ve cleared the balance from a card, if you’re paying annual fees on it and not getting enough benefit, now’s the time to take action.

“Generally speaking, a credit card that has an annual fee offers better rewards on purchases and premium perks like access to airport lounges or exclusive events,” said Stevens. “If this is something that you value, then you may want to keep the card. If not, then canceling makes sense since the annual fee is added to your balance.”

You can also consider converting your card to a different card that comes with no annual fee. This can be advantageous because when you convert a card instead of closing it, you maintain the credit line associated with that card, which helps your credit score. But that only works as long as you don’t run up a new balance that you can’t pay in full. So if you don’t think you can resist the temptation of overspending on a credit card, close it instead.

If you’re not sure what conversion options are available on a credit card, a bank’s customer service agent will be happy to help you go through them. Just make sure you call within 30 days of seeing the annual fee post on your credit card statement — in most cases, the bank will refund the fee as long as you convert the card within 30 days.

Don’t panic if you have to carry some debt right now

Don
Don't feel bad if you can't get rid of all your credit card debt immediately.
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While it’s never pleasant to have credit card debt hanging over your head, it’s important to realize that in these difficult economic times, it’s not the end of the world if you have to take on some debt.

“If you’re among the tens of millions of Americans who lost their jobs due to the pandemic and you don’t have much savings or much money coming in right now, it probably makes the most sense to carry credit card debt for a time,” advised Rossman. “Ask your card issuers for breaks like skipping payments (ideally without interest) and receiving lower interest rates.”

So don’t feel like you need all the answers to your debt situation right now. The key is just having a plan to start paying your credit cards off over time. And if you follow our four steps to getting rid of your debt, it won’t feel like such a burden to make one.

Having money issues due to the coronavirus pandemic? Read CNN Underscored’s previous stories in this series: