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9 Creative ways to pay off credit card debt

9 Creative Ways to Pay Off Credit Card Debt

Credit card debt can be absolutely debilitating.  I know two people who have had to declare bankruptcy as a direct result of being young and foolish with credit cards.  Both found themselves in positions where their interest payments alone were more than they could afford each month.

As a result, they declared bankruptcy at a young age and have been trying to dig themselves out for seven years.  Both wish they had come up with creative ways to pay off credit card debt rather than bankruptcy.  They can’t buy houses, or get loans, one couldn’t even finish school as he couldn’t get a student loan.

I can speak from experience; at my peak I believe I had somewhere around $8,000 in credit card debt with about $200 a month just covering interest.  I made some changes and have been credit card debt free for over 6 years.


1. Get Rid of Credit Card Interest

The first thing you should do, if possible, is ditch the interest.  That $200 a month in interest alone I was paying, didn’t even touch the principal, it was just profit for the bank.  What you want to do is a “Balance Transfer”.  You’re just going to take your current credit card balance and apply it to a new credit card.  There are plenty of 0% interest cards out there, find one with the longest term, this might be 12, 15 or even 18 months at 0% interest.  I called the credit card company to help open the card and process the balance transfer.  Then you simply take the total amount you owe, divide it by the 0% interest term and set up auto pay.

So for example:

$10,000 in debt

15 months at 0% interest

$10,000 divided by 15 = $667

By paying $667 a month you will be completely credit card debt free after 15 months and will have paid $0 in interest during that time.

Trying to pay off the debt without a balance transfer may require payments of $867 a month for 15 months, which is why this is such an important step if you can pull it off.


2. Sell Anything You Don't Really Need

Take a walk around your home, ask yourself if you really need all the stuff surrounding you.  Realize that you’re pretty much paying interest on everything you own while you have credit card debt.

Do you have old video games that you never play?  Would you buy them at 18% interest?  Of course not, so why hold onto them?  Sell them, take the money from the sale, and apply it to the credit card debt.

How about old clothes that you never wear anymore, you could take those to a consignment shop or sell them online.  Then sell all the clothes hangers.  Do you really need that end table or that wall décor?  Sell everything and put that money toward the credit card debt.


3. Go to Garage Sales and Flip

This can really be summed up as “find a side hustle” but garage sales are one of my favorites.  Even if all you can put together is the loose change under your couch cushions and bum $5 from a friend, you can still go to a garage sale and make money this weekend.

For those who don’t know, people at garage sales are typically looking to get rid of stuff, not make money.  “One man’s trash is another man’s treasure” is most true at garage sales.  It’s very easy to buy a few things for just a dollar or two and sell them online for $20+.

My buddy once bought a weird guitar made from an armadillo shell for $5 at a garage sale, it sold on eBay for almost $200!

My go to selling platform is always Facebook Marketplace, but you can also try eBay and Craigslist, or any of the new ones popping up.


4. Shop for New Car Insurance

This is one of my favorite creative ways to pay off credit card debt, as few people ever seem to mention it.

Do you have a car?  If so you have car insurance.  Now, when did you buy your car?  If It’s been over 12 months chances are you’re over paying on your car insurance.

The reason being, vehicles depreciate rapidly.  If you purchased a car 3 years ago for $25,000 it might only be worth $12,500 today.  But you’re not paying insurance for a $12,500 car, you’re paying insurance for a $25,000 car.  Call a competitor car insurance company and get a quote, if you’re happy with your current insurance let them know you got a quote but would like to stay with them if they can match it.

The first time I did this was for mine and my wife’s car, both were about 3 years old and I saved myself over $125 a month with that phone call.


5. Be Open and Honest About Your Credit Card Debt

Credit card debt can be embarrassing, even though just about everyone has had to deal with it.  Let your family and friends know you are working your way out of debt and it’s a major goal this year.

Instead of birthday or holiday gifts ask for cash to help pay down the debt.

Your friends might stop pressuring you about going out to the bar after work, or if they do force you to come out they might pay for your drinks.  Yes, it is charity.  But let the people who care about you help you, once you bang this debt out you can return the favor.


6. Make Daily Payments Toward Your Credit Card Debt

You may be wondering “how can I make daily payments when I don’t get paid every day”.  Well this is really about lifestyle changes.  If you are serious about getting out of credit card debt you’re going to have to make some lifestyle changes and curb your spending habits.

There is a trick I used for my student loan debt, but it works just as well with paying down credit card debt.  If you made a conscious decision NOT to spend money on something, take 30 seconds, go on your phone, and make a payment on your credit card in the amount you DIDN’T spend.

So for example, lets say I’m walking through the mall and I see a shirt that I LOVE.  Normally I’d buy the shirt without thinking twice as it’s on sale for only $28.  However, I’m trying to get out of debt, so I say to myself “NO! I don’t need it, so I’m not going to spend that $28”.  Take out your phone and make a $28 payment on your credit card right on the spot.

This does a couple things.:

  • First, it helps keep you motivated as you see the credit card balance drop every day.
  • Second, it limits how much interest you pay each month.
  • Third, it prevents you from losing site of your goal if you see extra cash in your bank account and start getting cocky.

Even if you don’t put the full $28, toward the debt at least put something.  Maybe put $14 toward the debt and reward yourself with the other $14.  The trick here is to stay motivated.


7. Freeze Your Student Loan Debt

If you have student loan payments consider putting them in forbearance while you focus on paying the credit card debt.  The reason for this is because all debt is not created equal.

In most cases, student loan debt is usually in the 4-6% range, sometimes even lower.  Whereas credit card debt could be over 20% interest.  By freezing the student loans and applying those payments to the credit card debt you’re actually saving yourself overall interest each month.

You’ll need to check on your particular situation, but if you find your student loans are under 6% and your credit cards are over 18%, you’re probably better off focusing all your monthly debt payments to the credit card.

Once your credit cards are paid off you can start making payments on your student loans again, plus you can add the amount you were paying toward the credit cards to pay them off even faster.

(Note: If you did a balance transfer and have 0% interest on your credit card you can skip this step, unless of course you need the student loan payments in order to pay off the credit card before the 0% interest period expires.)


8. Remember Dimes Make Dollars

In other words, you don’t have to make a huge sacrifice, instead find a couple small ones that you wont even notice, it’ll add up.

Do you need cable right now?  Can you cancel your gym membership and just run instead?  Are you paying $3 a month for some little subscription you don’t use?

Years ago I dove into my spending to find I was paying $15 a month for Docusign, $20 a month for a PDF editor, another $3 for a small subscription and $20 for a gym membership I wasn’t really using.  Each one alone doesn’t seem like much, but all together that was almost $60 a month I really didn’t’ need anymore.


9. Make a Band-Aid Sacrifice

What I mean by this is do something grand to try and pay off the debt asap, rip it off like a Band-Aid.

If you are renting an apartment consider subletting it and move back in with your parents for a couple months.  Apply every dollar of your rent payment to the debt then start over clean slate.

Do you have a nice car?  Consider renting it out on and either take public transportation or buy yourself the cheapest vehicle you can find while your nice car makes you money.  Once the credit card debt is paid off, sell the cheap car and drive your nice car again.

Did you have a big vacation planned this year?  Cancel it, put the $2,500 you were going to spend toward the debt and go on an even nicer vacation next year debt free.


Credit card debt sucks, but that’s why it feels so awesome to pay it off.  Do everything you can to avoid the bankruptcy route, it can really be a penny wise but a dollar foolish.  Both people I know who went this route wouldn’t do it again knowing what they know now.  They would have made major sacrifices and just paid it off, they’re so much further behind now then they were with the debt.

Ultimately you’ll have to look at your own situation.  There are people who make $20,000 a year with credit card debt and people making $200,000 a year with credit card debt.  Who you are, what you make and what you can sacrifice will all determine what creative ways to pay off credit card debt will work best for you.


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