An estimated 20% of Americans have $10,000 or more in credit card debt.
Five-figure credit card debt, and the interest that accrues along with it, can feel overwhelming. It’s the kind of debt that keeps people up at night, and prevents them from pursuing their other financial goals.
But, that debt doesn’t have to stick around forever. With a strategy, chipping away at a $10,000 in credit card debt is achievable. Here are some options for how to pay off $10,000 in credit card debt.
Key Points
• Use the debt avalanche method to focus on paying off the highest-interest debt first, saving money over time.
• Consider the snowball method to pay off small debts first.
• Credit card debt forgiveness involves negotiating with debt collectors to repay a portion of the debt, but it can negatively impact your credit score.
• Explore balance transfers to a card with a lower interest rate to save on interest costs and pay off debt more quickly.
• Starting a side hustle may not guarantee consistent income, but it can boost financial discipline.
Tips for Paying Off $10,000 in Credit Card Debt
Paying down $10,000 in credit card debt takes discipline and time. These tips and tools could help speed up the journey toward debt freedom.
Consider a Side Hustle
If your budget doesn’t have much wiggle room to make extra payments toward credit card debt, you might consider finding ways to generate more income. Starting a side hustle could be a powerful way to pay down a $10,000 credit card debt faster. Whether it’s grabbing a job in the gig economy or taking a catering job on the weekends, you can put those paychecks toward your credit card debt.
Ask for a Raise
If time is limited for a side hustle, think of how you could make more money in your current role. Is it time to ask for a raise, for instance?
Similarly, switching jobs may land you a higher salary. Just make sure that extra income goes toward debt payoff, and not lifestyle creep.
Switch to Cash
When you’re paying down $10,000 in credit card debt, it’s important to avoid accruing a higher balance. Adding more debt can not only feel discouraging, it can extend your payoff timeline.
As you tackle paying down debt, consider avoiding any further spending on credit cards. That can take the form of paying for things in cash, or using a debit card where you can only spend what you actually have. Making a switch to cash means you’re less likely to add to your burden of debt.
Debt Management Plans
While tips and tricks may help you pay down $10,000 in credit card debt, you may have to consider a larger overall strategy to move you towards payoff. Having a debt management plan in place can take some of the pressure away and could put you on a track toward paying off debt faster.
Two popular methods to accelerate debt repayment include the snowball and avalanche method.
Snowball Method
The snowball method prioritizes paying off small debts first and working your way up. Here’s how:
1. Make the minimum monthly payments on all debts.
2. Take inventory of all your debts and order them from lowest outstanding balance to highest.
3. Put any extra cash toward the smallest balance debt.
4. Repeat this until the lowest debt is paid off.
5. Next, move onto the next lowest debt, adding the surplus cash from step 2 to this card’s monthly payments.
6. Continue to repeat this process, scaling up to the high-balance debts once you pay off the lower ones.
While this method can seem counterintuitive because of the interest that high balances can generate, starting off with small wins has psychological benefits for some. Having those wins early on may motivate you to move forward.
If you tend to be more disciplined and don’t mind playing the long game, you might prefer the debt avalanche method to pay off $10,000 in debt. Here’s how to deploy the avalanche method:
1. Make minimum payments on all debts.
2. Compile all your debt, and order it by interest rate from highest to lowest.
3. Put any extra cash toward the debt with the highest interest rate.
4. Repeat until the highest-interest debt it paid off.
5. Move onto the debt with the next-highest interest rate. Put any extra cash toward this balance until it’s paid off.
6. Continue this process, prioritizing the highest interest debt first, until all balances are settled.
Typically, the debt avalanche saves more money in interest payments in the long run. However, it can take time to see a win with this method, as opposed to debt snowball.
Recommended: Creating a Credit Card Debt Elimination Plan
Credit Card Debt Forgiveness
Credit card debt forgiveness is not as simple as waving a magic wand at your balances and watching them disappear. Forgiveness does not mean the debt’s completely erased, and it comes with its own drawbacks.
Credit card debt forgiveness only becomes an option when a cardholder stops paying their debt and the credit card company sells the outstanding balance to a debt collector. From there, you can negotiate with the debt collector as to how much debt to repay.
Debt collectors typically buy debts for far less than their face value, and thus are willing to recuperate just a portion of the initial amount owed. For example, if you owe $10,000 in credit card debt and it goes to collections, you may be able to negotiate to settle the debt for just $5,000. That payment may be a lump sum or small payments over time.
While credit card debt forgiveness means paying less than the total owed, it has a fair share of drawbacks. Neglecting credit card debt can wreak havoc on a person’s credit score, and you’ll still need to pay some portion of the debt.
Additional Options for Paying Off Debt
Credit card debt forgiveness isn’t the only route toward paying off $10,000 in credit card debt. Depending on your situation, one of the following solutions may work.
Balance Transfers
Some credit card companies allow cardholders to make credit card balance transfers. That means you transfer the outstanding balance from one credit card to another, often with an introductory low interest rate or no interest.
Balance transfers do come with fees, but depending on how much you owe and how much you could save on interest, it could be worth it in the long run. However, keep in mind the interest rate the balance transfer offers may be for a limited time. You’ll want to pay off the remaining balance before the rate rises, or you could owe more than you did before the transfer.
Personal Loans
There are a number of common uses for personal loans, including paying off credit card debt. Often, a personal loan will have a lower interest rate than credit cards, which could help you pay down your debt faster and save on interest. If you’re struggling to figure out how to pay off $10,000 in credit card debt, consolidating multiple balances into a single loan also may streamline the process.
Your credit score can impact if you get approved for a personal loan, as well as what interest rate you receive. If you have a less than stellar credit score, you may not get approved.
Using a personal loan calculator can help you determine if this strategy will net you savings and, if so, how much.
Recommended: Types of Personal Loans
The Takeaway
Paying down $10,000 in debt might not be easy, but with the right strategies, it is possible. This could mean adopting an aggressive payoff method or looking for additional options to pay down the debt, like personal loans.
Think twice before turning to high-interest credit cards. Consider a SoFi personal loan instead. SoFi offers competitive fixed rates and same-day funding. See your rate in minutes.
FAQ
How do I get out of credit card debt with high interest?
You have options when it comes to paying off credit card debt. One to consider is the avalanche method, which involves paying off the card with the highest interest rate first while making minimum payments on other cards. Then, move on to the debt with the next-highest interest rate, and continue the process until you have no more balances.
Should I seek credit card forgiveness?
Credit card forgiveness isn’t common. That said, you may be able to negotiate with your creditor to reduce the amount you owe, which can help relieve some of your debt burden.
How long will it take to pay off $10k in credit card debt?
The length of time it will take you to pay off $10,000 in credit card debt depends largely on the amount of your monthly payment and your card’s APR. Consider this example: If you have an APR of 21.95%, and make monthly payments of $500, it will take you 26 months to pay off the debt. If you can swing a larger monthly payment of $1,000, it would take you 12 months.
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