I have almost $20,000 in credit card debt and, though I have stopped accumulating it for quite a while now, I'm trying to figure out the best way forward. Can someone please offer advice based on this scenario?

I have three cards:

  • Card #1: $5600 balance, APR 7.24%
  • Card #2: $3710 balance, APR 19.24%
  • Card #3: $10,500 balance, 0% APR - was a balance transfer. In November, it will be 18.99%

Should I transfer the balances back to Card #1? (Can I even do that with the balance on Card #3, which I transferred last year?) Should I be looking at some other option like a bank loan to consolidate the debt?

Thank you VERY much in advance.

  • 5
    What is your income, and how much do you have in your budget for debt payments? Do you have stuff to sell? Can you get an additional job?
    – Pete B.
    Commented Jul 1, 2014 at 15:01
  • 1
    I make $95,000 and I live in Massachusetts. I am in the process of going through a divorce and my wife doesn't make a lot of money, so my expenses are pretty high paying her mortgage and bills for 3 children, along with my $1200 per month rent. No real extra money for debt, though I try to pay $25 over the minimum on my cards. I was doing freelance IT stuff but that dried up; I can probably get another side job if I make an effort. In fact, I'm planning on it. But in the meantime, I don't want to waste any more money on CC interest than necessary. Thanks.
    – user17618
    Commented Jul 1, 2014 at 15:11
  • I don't think you can tackle that $10,500 credit card bill by November based on what you are saying. I would pay down or off Card #2. It goes against paying off the lowest interest first, but seeing as that one is not equal in balance to Card #2, you will pay Card #2 off first. The reality is based on your limited income, this is probably going to take you five years or more to pay off. I would look at getting a debt consolidation loan to consolidate two or more cards. Depending on your credit, you might be able to get at least a $15k loan. Commented Jul 2, 2014 at 11:13
  • Can you find a cheaper rental for yourself and former wife? Can the kids go to public school? You are making sacrifices and it will help if your family adapts to the changes as well. If you make $150k/yr fine it would be possible to maintain separate lives with the same lifestyle. Unfortunately, a feast-and-famine style income means less stability for everyone. The less expenses you have, it will be easier to meet your responsibilities.
    – Sun
    Commented Dec 8, 2014 at 23:02

6 Answers 6


From the comments, it sounds like you have a technical background. So I'm going to suggest you think of this as a technical problem: it's an optimization problem, where the variable you're trying to optimize for is total interest paid over the lifetime of the loans.

Step 1 is making sure you're using the credit available to you most efficiently. If there's room in the credit limit for card #1 to move more of your debt there, then definitely move your balances from the higher-interest cards. However, be careful; some cards will have different interest rates for balance transfers or cash advances. And definitely don't move any principal from Card #3 until the 0% interest rate expires.

Pursuing a bank loan as part of step 1 is valid as well. You could start with the bank you use for your checking account today. Credit unions can be a good source of lower-interest loans as well. Ensure that you fully understand the terms and interest rates, particularly if they change. Just be careful about applying for them; too many rejections can affect your credit rating negatively.

You also mention in the comments that you're paying "her" mortgage. I don't know how the ownership is set up there, but either refinancing or taking out a home equity loan can be a way to consolidate debt. The interest rate on a home loan will almost assuredly be less than on your higher rate cards, especially taking the tax deduction into account.

Step 2 is paying down the debt efficiently. The rule here is simple: Pay the minimum payment on all cards except for the one with the highest interest rate; any money you have above the minimum payments should go into paying down the principal on that one. In your case, that's Card #2.

Good luck!

  • 2
    My wife and I had several student loans and a car loan. This strategy is exactly what we followed and we are debt-free now.
    – Brandon
    Commented Jul 2, 2014 at 12:26

I am super sorry about your divorce and nod to you for taking care of your kids and spouse. This may sound super snarky, although not my intention, but you have an income problem. Despite making almost double the national average, you are supporting two households, and live in a high cost of living area. (BTW been there, done that and also in IT.)

The best way to avoid paying CC interest is to pay them off, and cut them up. Some might poo-poo the idea as you can earn some $ by getting CC rebates, but you are not in that mode right now. Consolidations, and balance transfers are a losing game as you can probably feel the November deadline looming.

If I was you, I would get a second job, even if it was something like pumping gas. Making an extra $500/month increases your balance reduction by 650%. Sell stuff. Recently an older version of Visual Studio, that was sitting unused on my shelf, went for $400 on Ebay.

The best way to solve this problem is through sweat equity. There are no easy answers. It sucks, but putting your big boy pants on and being prepared to work 20 hours of the day is the easiest way out of this.

If you do this you will learn a lesson about CC utilization that most don't learn.

  • I appreciate it, and agree 1000%. However, in addition to all that, I'm still interested in what specifically I should do with the credit card situation. Should I transfer from card #2 to card #1 and cut up card #2, so as to pay less interest? Should I try to get a loan and pay off all the card debt? Your comments seem more like strategy, and right on the mark, but I'm looking for more short-term tactics as well.
    – user17618
    Commented Jul 1, 2014 at 15:34
  • No, I won't be talking CC rewards. But I disagree with "cut them up." OP can attack his debt and be on the way to debt free, but his transmission goes. In my perfect world, all charge are paid in full every month, and all true emergencies just draw down the emergency fund. But if the cards are the only credit he has, this is a big issue. But ++1 for 'work 20 hours,' Even $500/mo extra will make a great dent in this debt. Commented Jul 1, 2014 at 15:57
  • 1
    I would not consider sweat equity to be sweet. ;) Commented Jul 1, 2014 at 16:01
  • 1
    Unfortunately I do not have it ready to publish, but I did the preliminary research and partially wrote an article on a guy (real world example) who decided to consolidate his debt rather then buckle down and pay it off. The reality is that interest rate is almost irrelevant once you decide to attack the debt.
    – Pete B.
    Commented Jul 1, 2014 at 17:19
  • 3
    On the surface I agree with you @JoeTaxpayer, however, emergencies can be defined very differently among consumers. Perhaps freezing it in a block of ice is a good compromise?
    – Pete B.
    Commented Jul 1, 2014 at 17:20

Without knowing your credit situation or your full budget it's a little difficult, but i'd go with the snowball method for now:

  1. Pay minimum to #1 & #3 for now.
  2. Take all extra money you can make and work to pay off #2. You should try to have this paid off before Nov when your other balance's APR is raised whatever way you can (extra job, sell things, cut back, do whatever you need).
  3. In Oct/Nov evaluate your options for transferring balance, getting a consolidation loan, or working with your bank (or a p2p site - etc) to get money moved to lower APR option. You should have less debt by then and that will help you when you if you try to get a loan.
  4. No matter what the outcome in Nov, continue snowballing. Take all extra money from paying off CC#2 and your regular payment and throw that towards whichever debt (depending on how many you have now) to pay the highest APR first. Once that one is done move to the next and next until your debt is paid off completely.

It may seem like not a big deal to have this kind of debt but you really should be looking at it as if your walking around with your hair on fire. It's a HUGE emergency. Debt, especially looming CC debt with high rates, can make things worse (think water on grease fire) really quickly so the faster you get rid of it the better. Good luck!


In addition to dpassage's excellent advice on dealing with your debt in the most efficient manner, you may also want to consider Consumer Credit Counseling Services (CCCS). These are non-profit agencies (free or low-cost) that can work with you and your creditors to come up with payment plans and sometimes negotiate lower interest rates to help you get out from under the debt.

You should definitely avoid for-profit "debt consolidation" companies, but the National Foundation for Credit Counseling can refer you to non-profit services in your area.

  • Use bonafide services. Use of non-bonafide services can lead to marks on your credit report. For instance, some of these companies will settle debt for you but it will lead to your report stating that you settled for less than the amount owed thus lowering your score. Commented Jul 2, 2014 at 11:10

In general, rule #1 is, don't take on any more debt! But you seem to have figured that out.

Rule #2: Arrange your finances so you can put the maximum toward paying off your debts as quickly as possible. People often talk about "fixed expenses". But there are far fewer truly fixed expenses than most people pretend. Your membership at the Yacht Club is not a fixed expense. You can always cancel it and reduce the cost to zero. Likewise your electric bill is not a fixed expense. You can probably find ways to reduce your consumption. Rent or mortgage are often put on the top of lists of fixed expenses. They're not. You may well be able to find a cheaper place to live. Etc. You may conclude that it is not necessary to cut these expenses because you are managing to put aside enough to retire your debts in a reasonable amount of time as it is. Without knowing your income, what your expenses are, and what alternatives are available to you, I can't say. Like you say you live in Massachusetts and are paying $1200 per month rent. Massachusetts is a high cost of living state, so I don't think that's insanely high. (Though any time people from the north east or California tell me what they're paying for rent or mortgage, my thought is always, Do you know what kind of a house you could get with that size mortgage payment here in Michigan?!) But if you just can't afford all your bills, then unless you are living in a cardboard box and eating ramen noodles every meal, there are ways to cut costs.

That said, my general advice on debts is this:

  1. Pay off the debts with the highest interest rate first, while making minimum payments on any others. That way you minimize the total interest you pay.

  2. Without deviating too much from 1, pay off smaller debts first. Psychologically, it is encouraging to be able to say, Okay, got that one completely paid off and off the books. And pragmatically, the fewer bills you have, the less chance that you will make a mistake and forget to pay one and thus incur late fees, or otherwise get confused.

  3. If it's going to take years to pay everything off, investigate if you can refinance the highest-interest debt. Credit cards are among the highest interest debts there are (after payday loans and borrowing from the Mafia, I suppose). You say you're renting so I guess you don't own any real estate that you could get a home equity loan. You could see what rates the bank will give you on a signature loan. It might not be any better than a credit card, but it's worth checking.

A game some people play is to look for credit cards offering deals on balance transfers. You can often find cards that will give zero or some very low interest for six months or whatever. Theoretically you could keep looking for such deals and bounce your principal from card to card until you paid it off. In practice this would eventually kill your credit rating, so I wouldn't take it too far.


Pay them all off, ASAP.

Start with the highest interest rate. Once that gets to zero, move on to the remaining one with the highest rate. Do that until you are out of debt.

  • Welcome to Money.SE. How does this answer add anything new? Jay's answer stated this exactly. His rule #1. Commented Apr 28, 2022 at 18:11

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