How to Pay Off $75,000 in Credit Card Debt

Consumer credit card debt is at an all-time high

One of the few positive things that came out of the COVID-19 pandemic was the drop in consumer debt. The government released several aid packages to help offset the impact of the pandemic, which was especially difficult for those that could not do their job from home. These stimulus checks and increased unemployment amounts that were part of the CARES Act helped people get ahead on their credit cards and pay balances down.

In March 2020, the monthly total on credit cards and other revolving accounts at U.S. commercial banks was $856 billion, according to the Federal Reserve. By April 2021, that number had dropped over $100 billion to $740.1 billion. Unfortunately, the money from the CARES Act ran out, and inflation rapidly increased. These positive strides are entirely wiped out, and as of January 2023, the total balances have reached a whopping $943.5 billion.

Due to inflation, more people are relying on their credit cards to pay for essentials like food and rent, and they’re having difficulty paying on these balances and staying ahead. Another concerning metric is the uptick in delinquencies, which has now surpassed pre-pandemic levels, according to a study from TransUnion. Gen Z has been hit particularly hard, as many are entering the job market for the first time during this period of inflation.

“Bankcard balances and originations continue to climb as consumers seek ways to cope with inflation, and this is particularly the case among Gen Z consumers, who have seen growth of 19% in originations YoY and 64% in balances over the same period,” Paul Siegfried, senior vice president and credit card business leader at TransUnion, said recently.

Credit cards are also one of the more expensive ways to borrow money, and APRs are currently hovering around 20%, an all-time high. This means it’s more costly than ever to carry a balance on your card, and so many people feel they have no other option. However, consolidating your debt is one route you can take. You can save money on interest on the road to becoming debt-free.

Learn more: Credit Card Debt Consolidation

How some have tackled large amounts of debt

Renee Whaley, from Clayton County, Georgia, was able to pay off $75,000 in debt in just three years. She says, “I’ve always closely managed my dollars, but despite even doing that, I still ended up in $75,000 worth of debt, not including the mortgage. In my mind, I thought I had it all together, right? I would do credit cards or whatever, just so I can get the points. It just piled on. I wasn’t paying attention. It shook me to my core.”

She says that one of her top tips is having a line item in your budget for absolutely everything. You should still enjoy life and treat yourself but include it as a line item. Whether it’s groceries or entertainment, everything is accounted for. Whaley also used the debt snowball method, where you pay off smaller accounts first before tackling the bigger ones. This helps many people feel accomplished for paying off accounts before they focus on the largest amounts.

Conversely, there’s the debt avalanche method, where you first focus on the debts with the highest interest rates. Both ways help pay off debt and are a matter of personal preference and depend on your financial goals. Try Credello’s calculators to see how debt avalanche and debt snowball could play a role in your debt repayment.

On the other side of the country, Amanda Courtney of California was able to pay off $72,000 in debt. Although it took almost eight years, she was able to do it and now lives a debt-free life.

Her first tip is allocating every dollar from your paycheck to a specific location, similar to Whaley. She says, “Every month, a week before payday, I can actually view my paycheck, so on that day, I rebuild my budget every single month. I look at what I have coming in versus what I have going out and I tell every dollar where to go.”

She also used the debt snowball method, which helped her feel accomplished and keep her goals in mind while on this journey. She notes that it’s so important to plan ahead rather than spend time trying to play catch-up. If you know you have a big expense coming up in six months, put money aside each month for that expense rather than putting it on a credit card when the time comes and figuring out how to pay it later.

As you can see from these powerful women, paying off mind-boggling amounts of debt is possible. You just have to make a plan and figure out what works best for you.

Strategies you can use to help you pay off your credit cards

One of the top ways you can pay off credit cards is to take advantage of a 0% intro APR balance transfer offer. There are plenty of credit cards that have this intro period for as high as 15 or 18 months, giving you plenty of time to pay off your balance. This saves you substantial amounts of money on interest and can help you consolidate your debt from multiple cards into one card.

You can also use a personal loan as part of your debt repayment plan. These loans, on average, have an APR of around 10% right now. Although you will still pay some interest, it is certainly lower than what you pay on your credit card. It also allows you to refinance all your debts into one loan with a fixed monthly payment. This lets you know how long it’ll take to pay off your debts and makes it much more manageable.

Another thing you can do is reach out to your lender and explain why you’re having a tough time making payments. They might be willing to help you with a payment plan or discuss your options when you are open with them.

Finally, get creative with your budget and make sure you know where your money is going. Cut back on expenses wherever you can and focus on one bill at a time. Whether you start with your biggest or smallest bill, you can pay off debt with determination and focus.

Bottom line

Consumer debt is at an all-time high during a time with high inflation and high interest rates. That is not a great combination, and almost everyone in the country feels the effects in some shape or form. As more people rely on credit to pay for the essentials, it’s important to stay focused and find a path toward financial freedom that works best for you. There are people out there that have paid off tens of thousands of dollars in debt. Although it takes time, you can do it.