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5 expert-driven tips for paying off $30,000 in credit card debt
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Over the last couple of years, issues with persistent inflation have sparked an increase in the price of many necessities like gas, food and housing. In turn, many households are struggling to pay for these essentials and are using credit cards to fill in the gaps. In fact, one in five credit card accounts are now maxed out.
While using a credit card can help you cover basic household expenses, this type of borrowing typically comes with high rates. For example, the average credit card rate is currently 22.63% (as of July 9, 2024) — but depending on your credit and borrower profile, your card rates could be much higher.
As a result, paying off credit card debt can be challenging, especially if you have a significant balance, like $30,000 in card debt. With a debt that high, it could take decades to pay off what you owe due to compounding interest. But the good news is that there are several strategies you can use to pay down $30,000 in card debt, experts say.
Need to get rid of high-rate card debt now? Explore your top debt relief options here.
5 expert-driven tips for paying off $30,000 in credit card debt
Here are some expert-driven strategies that may help you pay off $30,000 in credit card debt.
Choose a debt repayment strategy
If you have extra funds to pay more than the minimum amount on your credit cards, consider using debt repayment strategies like the debt avalanche or snowball methods.
The debt avalanche method involves focusing on making additional payments on your card with the highest interest rate first while making minimum payments on your other balances.
With the debt snowball method, you focus on making extra payments on your credit card with the smallest balance while making minimum payments on your other cards.
“Mathematically the debt avalanche method is better [because you can save the most on interest],” says Edward Zhexu Ai, assistant professor of finance at Wagner College.
Realistically, though, people need more motivation to cut their expenses consistently to pay off debts, Ai says. So, if quick wins will motivate you to continue paying down debt, the debt snowball method may be the best solution for you.
Find out more about what your debt relief options are today.
Tap your home’s equity
If you’re a homeowner, tapping your home’s equity via a home equity loan or home equity line of credit (HELOC) and using the funds to pay down some or all of your $30,000 in credit card debt could be a viable option, experts say.
For example, if you have good credit and you are financially stable, Ai says he would recommend using a home equity loan. You can typically get a lower interest rate with these loans [than credit cards] because you’re using your house as collateral.
However, one of the major risks is that home equity loans and HELOCs use your home as collateral. So, if you can’t repay the home equity loan as promised, the lender can foreclose on your home.
Take out a debt consolidation loan
Another debt relief option that can help you pay down $30,000 is taking out a debt consolidation loan, which is a type of loan that is used to pay off your debts, including credit cards. The main benefit of debt consolidation loans is that they typically offer lower average rates than your credit cards, reducing the amount owed in interest. And, by rolling multiple credit card balances into one loan, you can also streamline your payments.
You can typically get a loan for debt consolidation through a bank, online lender or credit union. In addition, many debt relief companies offer debt consolidation loans through partner lenders.
This option can be smart to consider, Ai says, if your credit score is good enough to get a favorable interest rate on the new loan.
Utilize credit card debt settlement
Many debt relief companies offer credit card debt settlement, also known as credit card debt forgiveness, as a service to those they work with. With this option, the debt relief company negotiates with your creditors to try and secure an agreement for a lump-sum settlement for less than you owe.
If successful, these negotiations can result in paying a lot less in total for your credit card debt. But while debt settlement may help you substantially reduce your debt, it does come with some downsides.
For example, a debt settlement can leave a negative mark on your credit report — and it’s often worse than bankruptcy, says Glenn Downing, CFP at investment firm CameronDowning. As a result, his firm doesn’t recommend taking this route to get out of credit card debt.
Another downside is that there are often tax implications tied to credit card debt forgiveness.
“The forgiven amount would be considered taxable income. So having credit card debt forgiven could lead to a higher tax bill,” says Ai.
Use a balance transfer credit card
Another option is to transfer some or all of your credit card debt to a balance transfer credit card. If you can qualify for the right balance transfer card, you could save thousands of dollars in interest. After all, some credit card issuers have 0% promotional APR periods as long as 21 months — allowing you to aggressively pay down your balance without additional interest.
According to Francisco Ayala, CFA and CFP at The Coleridge Group, a financial planning company, this is often the best way to reduce your interest costs. That said, this option does have some potential downsides.
For example, credit card issuers typically charge a balance transfer fee that ranges from 3% to 5% of the transferred amount. So, if you transferred $15,000 of your credit card debt to another card, you might pay a balance transfer fee ranging from $450 to $750, depending on the fee the card charges.
Another drawback is that once the promotional window closes, you’ll have to pay any remaining balance at the card’s standard rate, which is often high. So, if you’re going to take this route, it’s important to have a plan in place to pay off what you owe before the promotional period ends.
The bottom line
Paying off $30,000 in credit card debt is no easy feat, especially in today’s economic environment. But there are options to achieve debt relief. For example, you could consolidate debt on your own with a home equity loan or personal loan. Or, if you’re having trouble making minimum payments on your cards, it might make sense to seek help from a debt relief company.
Whatever strategy you use to pay down credit card debt, it’s crucial to review your finances to determine what got you into debt in the first place. If the reason was bad spending habits or a lack of income, you’ll need to modify your behavior or find ways to boost your income. If the behavior isn’t modified and cash flows aren’t improved, consolidation loans, balance transfers and other debt relief options are temporary bandages that are going to fall off at some point, Edward Silversmith, CFP at financial planning firm Wealth Enhancement Group, says.
Washington — The Georgia Court of Appeals on Thursday ruled that Fulton County District Attorney Fani Willis must be removed from the 2020 election case against President-elect Donald Trump, reversing a trial judge’s decision that allowed her to remain on the case.
Trump and more than a dozen allies were charged last year by Fulton County prosecutors related to what they said was an alleged scheme to overturn the results of the 2020 election in Georgia. The president-elect pleaded not guilty.
“After carefully considering the trial court’s findings in its order, we conclude that it erred by failing to disqualify DA Willis and her office,” the Georgia Court of Appeals said in its decision.
This is a breaking news story and will be updated.
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Credit card debt has been surging nationwide — and with rates where they are, it’s no wonder why. According to the Federal Reserve, the average credit card rate sits at over 23% right now — up from just 14% just a couple of years ago and the highest rate on record.
Today’s sky-high credit card rates have made it incredibly hard for consumers to get out of debt. In fact, delinquencies on credit cards have more than doubled on credit cards since 2021 alone.
But credit card rates are variable, so they — and your monthly payment — can change fast. Will rates on credit cards climb in the new year, though?
Find out how to get rid of your existing credit card debt here.
Will credit card rates climb in 2025? Experts weigh in
Want to know where your rates may be headed in the next year? Here’s what experts had to say.
Credit card rates may remain the same
The Federal Reserve reduced its federal funds rate at its last three meetings — a move that typically results in interest rate dips on variable-rate products like credit cards and HELOCs.
But future rate cuts aren’t certain — especially with recent reports showing inflation ticking back up.
“As the Federal Reserve digests the recent election results and economic reports on inflation, housing, and employment, it appears they may be in a rate pause for 2025,” says Jason Fannon, senior partner at Cornerstone Financial Services. “This neutral stance would keep the average credit card interest rate near 21% annually.”
Compare your credit card debt relief options online now.
…or fall slightly
If the Fed does opt to cut rates, credit card rates could fall too — but likely not significantly.
“I don’t expect any significant change to credit card interest rates,” Fannon says. “If the Fed does cut or raise the Fed Funds rate, it would have to be a sizable move in either direction to change the average credit card interest rate.”
Could credit card rates fall below the 20% mark if the Fed reduces its rate? It’s doubtful, pros say.
“It’s hard to predict beyond 12 months from now but if consumers want to see below-20% rates, then we need a variety of things to align,” says Eric Elkins, founder and CEO of Double E Financial Solutions. “We need inflation to remain below 3% for at least 15 months, we need to see average wage increases above 3%, we probably would need government regulations passed to limit the APR on the credit card institutions, and we’d need the Fed to continue reducing interest rates for borrowers. Lots of things need to occur.”
Other factors that impact your credit card rates
It’s not just the Fed and other economic conditions that weigh on credit card rates. Your credit score can impact what rate you get, too. So, if your score is on the lower end, improving it could help you snag a lower rate on a new card, which you could then transfer your existing credit card balance to.
“Having a good to excellent credit score could make you attractive to other companies,” says Troy Young, founder and president of Destiny Financial Group. “With a high score, you may be able to sell your debt to another company for a lower rate — in other words, refinance it by doing a balance transfer.”
The bottom line
If credit card debt is weighing you down, consider your debt relief options. There are debt consolidation, debt settlement, debt forgiveness and many other strategies that can help you tackle that debt more efficiently. Here are the best debt relief companies to consider if you need professional debt relief guidance.
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