The average American has about $6,000 in credit card debt, which can be a challenging amount to manage. If you’re just making minimum payments, expect to stay in credit card debt for many years — about 25 years on $6,000, by our calculations. But you can trim down the time it takes to pay off credit card debt by making more than the minimum payment or taking a balance transfer card offer. Let’s do the math and consider credit card payoff scenarios, including some that can have you debt-free in two years or less.
Why Credit Card Debt Is Problematic
Credit card debt is how much you owe to credit card issuers, which is the outstanding balance you haven’t paid off in full. Unless you have a 0% annual percentage rate offer, you’ll pay interest on any credit card balance you carry month to month, which can make it costly to maintain credit card debt.
[Read: Best 0% APR Credit Cards.]
Overspending on high-interest credit cards can rapidly accumulate credit card debt when you don’t pay your balance off in full each month. While you can stay afloat with minimum payments, avoiding late fees and penalties, you’ll still have to face the burden of paying interest on your balance.
Each month you don’t pay your balance in full, you’ll add interest to your balance and find yourself paying interest on interest. That makes your debt cost more and extends the amount of time it will take you to pay off your credit card debt.
Ideally, you can avoid credit card debt by only spending what you can afford to pay off each month in full. But reality doesn’t always align with what’s ideal, and it’s easy to rack up credit card debt if you’re hit with unexpected expenses, job loss, emergencies or economic pressure.
If you want to get ahead of credit card debt and stop making interest payments each month, you have options.
“Anyone with a high amount of credit card debt should try their best to pay it off as soon as possible since the interest payments will cost them a significant amount in the long run,” says personal finance expert Barry Choi, founder of the Money We Have website.
Credit Card Debt Payoff Scenarios
Ready to kick credit card debt out of your life? Let’s say you have $6,000 in credit card debt with a 24% interest rate. You can make minimum payments, more than minimum payments or do a balance transfer with a credit card.
“It’s best to avoid making just the minimum payment since it’ll barely make a dent on what you owe,” says Choi. “Instead, try to pay off as much as you can each month. Another strategy is to consider getting a balance transfer credit card where you get a promotional low interest rate.”
Let’s see how each of these scenarios plays out.
| Debt Payoff Method | Time to Pay Off | Interest and/or Fees Paid | Total Paid |
| Minimum payment (3%) | 25 years | $11,322 | $17,322 |
| Double the minimum payment (6%) | Eight years, two months | $2,932 | $8,932 |
| More than triple the minimum payment (10%) | Four years, seven months | $1,481 | $7,481 |
| Balance transfer at 21 months | 21 months | $300 | $6,300 |
| Balance transfer at 18 months | Two years | $258 | $6,258 |
Minimum Payments
The outlook is bleak if you only make minimum payments. If your minimum payment is 3%, you’ll take a little over 25 years to pay off your balance. That’s a total of $17,332 paid, including interest — close to three times the original $6,000 amount. This scenario can make you feel like you’re stuck in debt forever because you practically are.
More Than Minimum Payments
The story gets a little better if you can make more than minimum payments. Maybe a quarter century of payments on $6,000 is too much for you to stomach. Making payments higher than the minimum could get your debt payoff in under a decade.
Let’s say you can make a 6% monthly payment, double what the minimum requires. That puts you at a debt payoff of eight years and two months and a total of $8,932 paid, including interest. Much better than the minimum payment scenario, but the more you can pay, the better.
Maybe you’d like to pay more aggressively and make a 10% monthly payment. You’ll be debt-free in four years and seven months with a total payment of $7,481.
You can approach making more than minimum payments at varying levels. Maybe you have more to pay in one month than another. That’s fine if you aim for a baseline payment over the minimum payment.
[Read: Best Balance Transfer Cards]
Balance Transfer
Taking a balance transfer credit card offer can save you thousands in interest and shave years off your debt repayment.
“A balance transfer card can be helpful in accelerating paying off debt,” says Sameer Gupta, CEO of credit card optimization tool Uthrive and former director of product innovation for American Express. “You’re saving on interest, so what you were paying in interest you can put back into the payment to make a larger payment each month. Those payments in your 0% period will all go toward your principal.”
With a Citi® Diamond Preferred® Card, you can get a 0% APR on balance transfers for 21 months. You’ll have to pay a 5% balance transfer fee equal to $300 on $6,000, but that’s far lower than the 24% interest you pay monthly. If you plan to pay off the full balance within the 0% period, you’ll need to make a $300 monthly payment.
You’ll pay just $6,300 total, including the 5% balance transfer fee, and will be debt-free in 21 months. That’s less than two years and a much better scenario than chipping away with minimum payments for 25 years.
While paying off your $6,000 debt in full with the Citi® Diamond Preferred® Card is a near-perfect scenario, the card requires good to excellent credit and a $300 monthly payment for 21 months straight. You should also consider a less-than-perfect scenario, especially if your credit score needs work.
The Citi Double Cash® Card accepts applicants with fair to excellent credit. It has an 18-month 0% APR on balance transfers, and you can get a 3% balance transfer fee if you complete your transfer within the first four months. After 18 months, the variable APR will be 19.24% to 29.24%, based on your creditworthiness.
Let’s say your goal here is to pay off your debt within two years, even if you have to pay some interest. With a $180 balance transfer fee, you’ll need to pay $263 monthly to be debt-free in 24 months. Assuming a 24% APR, you’ll pay $78 in interest during the six months after the 0% APR expires, bringing your total paid to $6,258.
Tips for Effective Credit Card Debt Repayment
“High-interest debt repayment, especially credit cards, needs to be a priority,” says Choi. He suggests identifying expenses you can reduce from your monthly budget and then using the money saved to pay toward your credit card debt. Choi also suggests picking up more hours at work, if possible, or selling items you don’t need to give you additional income to apply to your debt.
“The key thing to remember is not to go into debt again after things are paid off,” says Choi.
Budgeting and financial planning, including building an emergency fund, can help you stop credit card debt before it starts. With an emergency fund, you can use your savings in a crisis rather than relying on high-interest credit cards.
While the math certainly favors getting a balance transfer credit card and paying it off within the 0% APR term, not everyone can qualify. A balance transfer card may require that you have good or excellent credit to get approved and have a credit line large enough to accommodate your full balance plus the balance transfer fee. If that’s not your reality, Gupta has an alternative suggestion.
“If you can’t get approved for a balance transfer card, try to make as much of a payment as you can,” says Gupta, who warns not to make so much of a payment that you’re delinquent on other important payments such as your rent or mortgage. “Then, in a few months, you can improve your credit and be more likely to be approved for a balance transfer credit card.”
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How Long Does It Take to Pay Off $6,000 in Credit Card Debt? originally appeared on usnews.com
