How to Pay Off Your Credit-Card Debt in a Year

Take these steps to get a grip on what you owe and wipe out your balances quickly.

A recent survey by found that half of the respondents who have credit-card debt said it’s extremely important to have a plan in place this year to pay off what they owe. However, consumers often say they want to repay debt but don’t take the time to figure out how to make that happen, says Gerri Detweiler,’s director of consumer education.

Usually after people commit to eliminating their credit-card balance, they simply start paying a little more than the minimum due each month, Detweiler says. But for those serious about paying off their debt quickly, that approach won’t work. If you want to wipe out your credit-card debt in a year, you have to create a specific plan and stick to it. Here’s how:

Calculate your monthly payment. To pay off your debt in a year, you first need to figure out what your monthly payment should be to reach that goal. has a Credit Card Payoff Calculator that lets you enter your balance, interest rate and monthly payment and will show you how long it will take to pay off your debt at that rate. It also provides a table that shows you how much you should increase your payment to pay off your balance faster. For example, if you have a $5,000 balance on a card with an 11% interest rate (the average for low-rate cards), you would need to pay $450 a month to wipe out your debt in a year. If you just make the minimum payment (2% of the balance), it would take you more than 23 years to get rid of $5,000 in credit-card debt.

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Find room in your budget to make that payment. Chances are there are plenty of leaks in your budget you can plug to increase your monthly cash flow – and monthly credit-card payments. Here are 28 unnecessary expenses you might be able to eliminate. Plus, there are ways you can increase your monthly earnings to boost your credit-card payment. For starters, you might be able to take home more every month by simply adjusting your tax withholding. If you typically receive a tax refund, you’re letting Uncle Sam hang on to too much of your money during the year. You can keep that money for yourself and boost your paychecks by filing a new W-4 with your employer to adjust your tax withholding. To find out how many exemptions you should be claiming, try our Easy-To-Use Tax Withholding Calculator. And see our slide show for more ways to get extra cash.

Get your interest rate as low as possible. The lower your interest rate, the larger the portion of your monthly payment that goes toward paying off your actual debt rather than interest, Detweiler says. Look for credit cards with 0% balance-transfer offers to dramatically reduce your finance costs. But watch out for transfer fees, which can be 2% to 4% of the transferred amount. You can compare offers at, or or call your card issuer to negotiate a lower rate.

Can’t pay off all your debt in a year? If you’ve run the numbers and looked for ways to cut back (or earn more) but still can’t come up with the monthly payment needed to pay off your debt in a year, Detweiler suggests adjusting your goal. If you have several credit cards, choose one to pay off first – preferably the one with the highest rate to minimize the amount of interest you pay. See Why Your Credit Card Debt Won’t Die for more on why this approach works. You can consolidate accounts with smaller balances by taking advantage of a balance-transfer offer.

The key is to automate your payments. Log on to your account online and set up recurring payments in the amount needed to pay off your balance as fast – yet affordable -- as possible. Your credit-card statement will list the monthly payment needed to pay down your debt in three years. So you can use that amount if a one-year time frame is unrealistic. Then put your cards away so you can’t use them and rack up more debt.

Cameron Huddleston
Former Online Editor,

Award-winning journalist, speaker, family finance expert, and author of Mom and Dad, We Need to Talk.

Cameron Huddleston wrote the daily "Kip Tips" column for She joined Kiplinger in 2001 after graduating from American University with an MA in economic journalism.