6 Steps To Eliminate Credit Card Debt in 3 Years or Less

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Credit card debt doesn’t have to be a long-term drain on your personal finances.

With a solid plan and some personal resolve, you might be able to eliminate that high-interest nuisance in just three years.

Money expert Clark Howard says the key is to set a realistic repayment timeline that makes tangible progress without busting your budget.

“My philosophy is to get that credit card debt paid off in three years or less, because that’s a time period that people can see great progress pretty quickly. Every month you’re going to see more and more of the money going toward principal while maintaining the same payment,” Clark says.

“I find when people set a five-year goal they tend to fall off the wagon. If they’ll plan for three years or less and stick to it, they’ve got a decent shot of getting it done.”

6 Steps To Eliminate Credit Card Debt in 3 Years or Less

Each person’s credit card debt situation is going to be a little bit different, so let’s set some parameters for this discussion:

  • Throughout this article, we’re going to reference national average numbers to help show an example of how these six steps can impact your payoff process. I pulled these numbers in mid-2020. The current numbers may be slightly different, but the principles applied are still relevant.
  • According to Value Penguin, a website that does personal finance research, the average American household was carrying approximately $5,800 in credit card debt in June 2020. For the purposes of this exercise, we used that figure as our target repayment amount.
  • As of June 2020, Bankrate reported the average credit card interest rate was 16.05% APR. We used that as our interest rate.
  • According to this research from the Federal Reserve Bank of St. Louis, the “real median” American household income is $63,179. We used that number for adjusting potential monthly payments.

Feel free to adjust the numbers to reflect your particular situation as we move through this exercise.

Step 1: Stop Using Your Credit Cards

The first step seems like it should be self-evident, but it’s actually one of the more difficult steps to put into action.

Clark says that, in approximately 90% of the calls he gets from people looking for help with eliminating credit card debt, the callers tell him that they’re still actively using the cards.

“Anytime you’re trying to reduce credit card debt, you have to stop using them,” Clark reiterated.

None of the advice here will do you much good if you continue adding to your credit card debt at the same time you’re trying to get rid of it.

Step 2: Download a Financial Calculator and Take Inventory

Before you can develop a plan to eliminate debt, you must first understand it. Gather all of your latest credit card statements and take inventory of your debts and interest rates.

Clark recommends downloading a free financial calculator on your cell phone (like this one). Capital One also has an easy-to-use credit card payoff calculator available for free on its website. This tool will help you understand the effort it will take to eliminate the debt.


All you’ll need to make the calculator work is your balance and interest rate for each credit card. Type in that data, and you should be able to assess the monthly payments necessary to achieve a specific payoff date. Try comparing six-month intervals to see just how much you could save by accelerating the process.

Remember, our target date needs to be — at most — 36 months away.

National Average Exercise: If we run the $5,800 debt through the Capital One payoff calculator at a 16.05% interest rate, here’s a look at how the six-month interval approach could impact how much you’ll save in interest charges.

Months to PayoffMonthly Payment RequiredTotal Amount Paid

Step 3: Set a Realistic Goal for Paying It Off

Clark loves a good debt-elimination plan, but the most important element of any plan is your ability to stick with it.

“The way I’ve always liked to talk about debt is to come up with a number of months that you’d like to achieve your goal, and see what you’d have to pay per month to do so,” Clark says. “I don’t want you to say ‘Yeah! I’m going to do this in a year!’ and then make one payment, realize you can’t do it within your budget and then just give up.”

If you’ve successfully completed Step #2 with the financial calculator, you already know what it’s going to take each month to eliminate your debt.

This step is about taking that information and comparing it against the funds you’ll have available to apply toward the debt after you meet your monthly expenses.

Your goal should be an aggressive number but one that’s also within your means.

National Average Exercise: Using the national “real median” annual income figure of $63,179, the average American household has a gross monthly income of approximately $5,264.92. Here’s how the monthly payment totals we calculated in Step #2 compare to the percentage of that gross monthly income.

Payoff Period Monthly Payment RequiredPercentage of Monthly Gross Income
6 months$1,012.4219.2%
12 months$526.389.99%
18 months$364.706.3%
24 months$284.125.4%
30 months$235.984.5%
36 months$204.053.9%

As you can see, the percentage of gross income required to eliminate debt on an 18-month term versus a 36-month term is just an increase of 2.4%. Finding that extra $160 each month could eliminate your debt in half the time!

Step 4: Consider Applying for a Balance Transfer Credit Card To Expedite the Process

Once you’ve arrived at a dollar figure that fits both your monthly budget and the three-year time frame, let’s focus on trying to help speed the payoff process along.


One of the easiest ways to expedite paying off credit card debt is to lower your interest rate. You can do this by getting a balance transfer credit card. But to do this, your credit score will need to be high enough to qualify for such a card.

Many balance transfer cards offer an introductory 0% APR period for your transferred balance. Those periods, which can last 18 months or more, could provide an opportunity to pay down the principal of your debt without any interest charges.

Be aware that many of these cards charge balance transfer fees. Those fees are usually a percentage (typically between 3-5%) of the total amount you transfer to the card. So before you take advantage of a 0% APR offer, make sure you’ve calculated the amount that you will have to pay for the transfer fee to be sure it is less than the interest you’d pay on your current card.

Step 5: Reassess Your Monthly Budget for Potential Savings

While you’re mapping out your credit card payoff plan, it’s also a good time to take a look at your household budget. Any extra monthly savings you could squeeze out of it — even if it’s just temporary — could make a real difference in your battle against credit card interest.

A Zagat research poll indicates that, until we started staying home because of coronavirus, Americans ate out an average of 5.9 times per week. If you cut back on that and put the savings toward your credit debt, you could probably get more aggressive with your debt repayment plan.

You should also examine monthly bills like your television, internet and cell phone plans to ensure that you’re getting the best deal. Team Clark has guides to help with each of those expenses.

Step 6: Explore Income-Enhancing Opportunities

If you’re not able to trim your monthly budget and put that money toward credit card debt, perhaps you can develop an additional revenue stream instead.

Team Clark has some ideas for places to search for odd jobs, and considering a gig economy job like being an Instacart shopper or driving for a ride-hailing service.

It’s important to avoid scams that paint themselves as high-pay, low-effort side jobs: They’re usually too good to be true. And the last thing you want is to waste your time and money on a project that puts you further away from your goal.

Even a small uptick in the money you can earn — and then apply to your debt — could help shave dollars and months off your credit card debt repayment plan.