How to Reduce Your Credit Card Debt

How to Reduce Your Credit Card Debt

When you’re trying to reduce credit card debt, a mix of planning and perseverance can help you reach that goal.

Just as it takes time and determination to climb a mountain, it takes time and determination to conquer a mountain of debt. But if you’re equipped with the right knowledge and tools, the journey to conquering that mountain can be relatively smooth.

Steps to Reduce Credit Card Debt

1. Evaluate your finances

2. Create a budget

3. Work on your financial habits

Evaluate your finances

Create a list of everything you owe, including credit card debt and all other monthly bills. This review of your overall debt should include the balance and the annual percentage rate (APR).

Looking at each card’s APR will help you decide how to approach reducing your debt. In some cases, you might want to tackle higher-interest debt first to save money on interest charges; in other cases, you might want to give yourself a psychological edge by paying off lower-balance cards first.

Next, compare your debt and expenses with your income. As for your income, take into account your salary, the interest earned on your savings and anything else that generates money.

Create a budget

Once you’ve prioritized your debts, it’s time to establish a budget. A budget will help you track your spending and get a better handle on how to shrink your credit card debt.

Online tools such as Mint and YNAB (You Need a Budget) can be useful in setting a budget and making sure you don’t stray too far from it each month. Creating a budget will guide your decision about what strategy to use for reducing your credit card debt.

Work on your financial habits

If you don’t alter the behaviour that got you into credit card debt in the first place, you might slip back into debt again in the future.

We stress the importance of differentiating between “wants” and “needs.” Do you need food and housing? Definitely. Do you need to pay your bills and set up an emergency fund? Most likely. These “needs” should take precedence over “wants.”

If you’re not keeping close track of your income and spending, you may wind up in debt all over again. After becoming debt-free, apply the lessons you’ve learned and work toward the establishment of healthy financial habits.”


Reducing your credit card debt usually doesn’t happen immediately. If it took you a while to rack up the debt, it may take you a while to eliminate it.

Hopefully, once your credit cards are fully paid off, you won’t go back to the previous financial habits that led you into debt.