Have $25,000 in credit card debt? Here are 5 simple ways to get rid of it

Compounding interest on credit card balances can quickly snowball for cardholders, which is why it's imperative to pay your balance in full each month to avoid costly interest charges. Tackling credit card interest before it gets out of hand can be especially difficult in this high-interest rate environment.

According to the most recent Federal Reserve data, cardholders now pay an average interest rate of 22.76%, up from 16.28% in 2020. Many credit cards now charge interest rates of around 30%. These higher interest rates are one reason Americans' average credit card balances are spiking. A 2023 Experian consumer credit study reports Americans' average credit card debt in 2023 was $6,501, a 10% jump from 2022.

Higher interest rates make less of a difference when your credit card debt is minimal. But, if you're facing a substantial amount, such as a $25,000 balance, it can be particularly challenging to pay down that debt using traditional payoff methods. Depending on your term and interest rate, it could take years or even decades to pay off a $25,000 balance if you only make minimum payments. 

Fortunately, you have several tactics and tools at your disposal to pay down your balances. Below, we'll detail five practical ways to help tackle your credit card debt right now.

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5 simple ways to get rid of $25,000 in credit card debt

$25,000 worth of credit card debt can feel overwhelming, but it doesn't have to be. Here are five simple ways you can start reducing it now:

Set specific goals

Establishing clearly defined goals can help you create an achievable plan for tackling $25,000 or more in credit card debt. Start by listing all your balances, monthly payments and interest rates. Next, determine how much you can apply toward your monthly credit card balances. Finally, create near-term and long-term goals, such as a target date for paying off your first balance and another deadline for zeroing out all of your balances.

Reduce your credit card debt with the right strategy now.

Utilize debt repayment strategies

Not sure how much money to direct to each credit card? Consider following one of two popular debt repayment strategies to simplify your debt payoff.

• Debt snowball method: With this method, you pay off your smallest credit card balance. Once that balance is zero, take the money you were allocating for that payment and redirect it to the next-smallest debt. Continue from there until all of your credit card balances are eliminated. You might prefer this method if you think you'd benefit from "small wins" that increase your momentum toward achieving your goal. 
• Debt avalanche method: This method works much like the debt snowball method, but instead of focusing on the smallest credit card balance, you concentrate on paying down the account with the highest interest. Once an account is paid off, you direct the money you were using for that account to the credit card with the next highest interest rate. In this way, you prioritize eliminating your most expensive credit cards first, which could save you money.

So, which method should you use? "On paper, paying down higher interest rate loans first should save more money, but from a psychological standpoint, the debt snowball is often more practical and effective to build and maintain momentum to really chip away at debt," says Kevin Coombs, CFP and lead financial planner at Donaldson Capital Management. Coombs recommends being honest with yourself about which strategy you're more likely to stick with.

Consider debt consolidation

A debt consolidation loan or a 0% introductory APR balance transfer credit card can accelerate your payoff timeline by reducing or even eliminating interest charges.

• Debt consolidation loan: This type of personal loan simplifies your debt repayment by combining all of your debts into one loan, usually with lower fixed interest rates. You repay the amount in fixed installments for the term of your loan, usually between 12 and 60 months.
• Balance transfer credit cards: Most card issuers offer balance transfer cards, some with a 0% introductory period of up to 21 months for new cardholders. This period may give you enough time to repay your loan interest-free, or at least make substantial progress in paying down your balance. Be aware, however, that any remaining balance after the promotional period expires reverts to your card issuer's standard rate. These cards can charge a fee between 3% to 5% of the transfer amount. You may need a credit score above 670 to qualify for a balance transfer credit card.

"Perhaps the best weapon in your battle against credit card debt is a 0% balance transfer credit card," says Matt Schulz, personal finance expert and author. "Being able to go a year or more without accruing any interest on your transferred balance is a really, really big deal. It can dramatically reduce both the amount of interest that you pay and the time it takes to pay off your balance, which is what it is all about." 

Ask for a lower interest rate

If you can't get a 0% introductory balance transfer card, call your credit card company and ask for a lower rate, says Ryan Johnson, BFA, founder and financial planner at Hundred Financial Planning. "They don't have to say yes, but it is not uncommon to get a lower rate. The key is to continue making higher payments, even if the interest rate is lower. You want to eat away at the principal of the debt as much as you can." 

Learn more about negotiating with your credit card company here.

Use a debt management company

A debt management program can help you gain control over your credit card debt with little impact on your credit score. In this circumstance, a credit counseling company or debt relief company negotiates with your credit card company on your behalf to secure lower rates with your creditors. They also help you create a payoff plan. You'll make monthly payments to the credit counseling company, which will distribute funds to your creditors to pay your accounts.

"Credit counselors work with your creditors to come up with a plan to help you more easily afford your debt payments, which can include waiving fees, lowering interest rates and changing other terms and conditions," says Schulz. "Just having someone on your side, working with you and guiding you through the process, can be a major relief, but it can also lead to you getting breaks from the card issuer that you might not have been able to arrange on your own."

As with most financial decisions, it's wise to consider the downsides before enrolling in this sort of program. Schultz notes, "You'll typically pay fees to the credit counselor for their management help, and you'll likely have to close any cards that are included in the plan. That can make things a little dicey, depending on your overall financial situation."

The bottom line

Paying off a $25,000 or larger credit card debt will take time, so exercise patience. But, by employing some of the above strategies, and consistently paying more than your minimum balance, you may pay off your debt sooner than you think.

If your budget doesn't have much room for extra payments above the minimum, it could be tough to get rid of credit card debt in a reasonable time frame. In that case, consider talking with a credit counselor. You can search for certified credit counselors in your area through the National Foundation for Credit Counseling and the Financial Counseling Association of America.