Credit Card Debt

The short answer

Credit card debt is usually high-interest debt, so carrying a balance can make purchases cost much more over time. If you cannot pay the card in full, stop using it for new charges and make a plan to reduce the balance.

Why it matters

Interest is charged against the unpaid balance and can compound your problem month after month. Paying only the minimum may keep the account current, but it can take years to clear the debt and cost a large amount in interest. Learn more in Why carrying a balance is almost never worth it and Minimum payments explained.

What to do first

Keep making at least the required minimum payment on time. Then stop adding new charges if you cannot pay them in full, review your budget, and direct as much extra money as you safely can toward the balance. Paying more than the minimum reduces both the payoff time and the interest you pay.

How to pay it down

List each card’s balance, interest rate, and minimum payment. After covering every minimum, focus extra payments on one card at a time. Targeting the highest interest rate usually saves the most money, while targeting the smallest balance can provide faster milestones. Use Paying down debt to choose an approach and fit it into your broader order of operations.

What to consider next

Build enough cash cushion to avoid putting the next surprise expense back on the card. If you are struggling to make minimum payments, contact the issuer before missing a payment and ask what assistance may be available. For perspective on when borrowing can be useful or harmful, read Good debt, bad debt, and necessary debt.