Adheres to Americans now owe a record $1.28 trillion in credit card debt, with average APRs hovering around 23%. On a typical $6,500 balance, making only minimum payments costs roughly $1,500 in annual interest.
Below are five strategies - with real numbers - to help you cut that cost and get out of debt faster.
Debt consolidation rolls multiple debts into one loan at a lower rate. Swapping a $10,000 credit card balance from 23% APR to a 10% personal loan saves roughly $1,300 in interest over 3 years.
When it makes sense:
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Two proven DIY methods - no new credit required:
Pick whichever you will actually stick with. For lump sums like tax refunds or bonuses, always throw them at your highest-rate debt regardless of method.
| Avalanche Method | Snowball Method | |
|---|---|---|
| Priority | Highest interest rate first | Smallest balance first |
| Best for | Saving the most money on interest | Staying motivated with quick wins |
| Downside | Can take longer to see first debt eliminated | May pay more total interest over time |
| Ideal when | Your largest debt has the highest rate | You have several small balances under $1,000 |
Debt settlement programs negotiate with creditors to reduce your balance - sometimes to 40-60% of what you originally owed. CuraDebt handles credit card, medical, and tax debt, with most clients finishing within 24-48 months.
Best for:
Not ideal if:
Note: Settlement typically damages your credit score and forgiven debt above $600 may count as taxable income.
A 0% intro APR card pauses interest for 12-21 months - every dollar you pay reduces your balance directly.
Example: $5,000 at 23% APR → transfer to 0% card → pay $278/month → debt-free in 18 months at $0 interest. On the original card at the same payment, that costs ~$900 in interest.
To make it work:
Best for: credit card debt under $10,000 with a credit score of 670+.
No payoff strategy works without cash freed up to apply to your debts. The 50/30/20 rule is a simple starting point:
On a $4,500/month take-home, that is $900 toward debt. Even $450/month extra clears $10,000 at 15% APR in about 25 months.
MoneyLion tracks your spending and credit score in one place, so you always know where your money is going. Also see our budgeting guide and 181 money saving tips.
Match the strategy to your situation:
Most people benefit from combining two or more strategies. For a complete step-by-step plan, see our guide on how to get out of debt.
What is the fastest way to reduce debt?
The fastest approach combines a balance transfer card (0% APR for 12-21 months) with the avalanche method, which targets your highest-interest debt first. This eliminates the most expensive debt while paying zero interest on transferred balances. For large debts above $10,000, a consolidation loan at a lower rate can also speed up payoff significantly.
How can I pay off debt with no money?Start by listing every expense and cutting non-essentials to free up even $50-100 per month for extra debt payments. Use the snowball method to eliminate your smallest debt first, then redirect that payment to the next one. Look into government programs like the CFPB's debt relief resources, and consider free nonprofit credit counseling through the NFCC.
Is debt consolidation a good idea?Debt consolidation makes sense when the new loan's interest rate is lower than what you currently pay on your debts. The average personal loan rate is about 11.65% (Federal Reserve G.19), compared to around 23% on credit cards. If consolidating saves you money on interest and simplifies your payments, it is a smart move. It is not worth it if the new rate is similar to or higher than your current rates.
Does debt settlement hurt your credit score?Yes. Debt settlement programs typically require you to stop making payments while the company negotiates with creditors, which results in late payment marks on your credit report. Settled accounts also appear as "settled for less than owed" rather than "paid in full." Your score may drop 100+ points during the process, though it can recover over time. Consider settlement only when the alternative is bankruptcy.
How long does it take to become debt-free?It depends on your total debt, interest rates, and how much extra you can pay each month. Someone with $10,000 in credit card debt paying $450 per month toward it (beyond minimums) could be debt-free in about 25 months. Debt relief programs typically take 24-48 months. The key factor is consistency. Even small extra payments of $100 per month can cut years off your payoff timeline.
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