How To Reach Your Goal Of Becoming Credit Card Debt-Free

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Credit card debt can put a serious drag on your net worth, which is not a surprise when you consider that most banks offer credit cards with double-digit interest rates and require monthly payments, that only cover a portion of the outstanding balance. It’s no wonder that many struggle to break the cycle of never-ending credit card payments.

"Credit card debt can put a serious drag on your net worth."

If getting rid of your credit card is one of your financial goals, use these steps to achieve your credit card debt free goal.

1. Stop Adding To Your Debt

Credit cards offer what is called a “revolving line of credit” where the portion of credit you pay down every month, is available for you to use for the next billing period. This can leave you in the cycle of charging purchases on your credit card, then making your scheduled minimum payment, followed by the additional spending of the available credit remaining.

Avoid any additional spending on your credit cards, and opt to spend cash instead. This way, even when you make your minimum payments your balance won’t grow due to new charges.

2. Create A Budget For Your Spending

Once you have committed to making purchases, only when you have the money on hand, creating a budget is your next step. Develop a spending plan each month, that accounts for not only your savings, bills, and debt payments, but also any other spending, like unplanned trips to Target.

This spending plan will help you be more mindful of your purchases and provide a reference to compare what you planned to spend on your actual charges. Consider checking in on your planned versus actual spending, at least weekly. This will help you take the guesswork of what adjustments you’ll need to make to stay on track.

3. Build Up A Cash Cushion

 A lack of emergency savings, a car repair fund or a financial buffer to cover an unexpected medical expense can contribute to spending on credit. That’s why it’s important to build up a cash cushion to avoid creating new debt when these situations come up. Start by establishing a separate account for an emergency fund of at least $1,000, as well as a stash of cash for car repair and other variable expenses.

If you are not sure how much you need to save for a cash buffer, outside of your emergency fund, review your last 12 months of spending and identify the total amount of unexpected expenses you charged on credit. Use this as your initial cash buffer goal.

4. Increase Your Cash Flow To Put More Towards Debt

Not keeping track of your cash flow, that is the amount of money moving in and out of your accounts, is a sure-fire way to spend on credit when your cash runs low.

Set aside time to increase your cash flow, through careful planning of when you spend, cutting your expenses and exploring ways to increase your income. With an increase in cash flow, you can scale back your reliance on credit cards and use the cash you free up to pay down your credit card debt.

5. Create A Strategy To Pay Down The Debt

Although you will eventually repay your credit card debt, by making your minimum credit card payments, if you don’t add any more charges, and your interest rate remains fixed, it’s essential to create your own debt pay off strategy.

Start by reviewing the balance owed, the annual interest rate, and minimum monthly payment due, on each of your credit cards, and rank how much each debt is costing you each month. Use that information, prioritize your credit card debts and layout a plan to pay them off.


Dumping your credit card debt may seem like too tall a mountain to climb, but with these steps, you’ll have a clear path to become credit card debt free.

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