9 Ways to Pay Off Credit Card Debt When You Have No Money

How To Crush Debt | Credit Card Debt | Pay Down Debt

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It may feel challenging to pay down credit card debt when you don’t have any money left over at the end of each month.

If you’re struggling to get your credit card balances down, you have options.

While you may be tempted to cut back on little things here and there, the truth is, you might need to make more significant changes in your financial life in order to pay down your credit card debt.

In this article, we’ll discuss nine ways to tackle your credit card debt when you have little to no extra money. You’ll also learn some bonus tips at the end.

Let’s jump right in.

1. Create a Budget and Track Your Spending

Creating a budget and tracking your spending serves to help you see where you might be overspending, as then you can cut back. 

When you cut back, you have more money available at the end of the month that can be applied toward your credit card balance.

You can create a budget with pencil and paper, a spreadsheet, or an app like YNAB (You Need A Budget).

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Use your budget to identify spending habits and look for ways to cut back. You may also find that you need to increase your income.

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2. Avoid Picking Up More Debt

Paying off your credit card can feel impossible if you continue to use it. One strategy is to stop using your credit card entirely and only use money that you have, such as with a debit card or by paying in cash.

Payday loans can also harm your financial situation, so avoiding these whenever possible is wise.

Payday loans are short-term loans that are generally paid back in a few weeks, but that can carry 3-digit APRs, meaning you’ll owe a lot of interest, especially if you can’t pay it back in a timely fashion.

3. Cut Back On Spending

When you can’t pay down your credit card debt because you have no extra money, consider cutting back on as much spending as possible. 

Here are some ways to drastically cut your spending:

  • Stop shopping online
  • Downgrade your cable, internet, and phone service
  • Use cash back apps when shopping for groceries
  • Stop going out to eat or getting takeout
  • Cancel streaming services
  • Cancel subscriptions that you don’t use or don’t need
  • Quit bad habits such as drinking alcohol or smoking cigarettes

Cutting back on spending is one side of the coin to help you pay down your credit card debt. The other side is to increase your earnings.

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4. Increase How Much You Earn

You can only cut back your expenses so much, and while you’re doing so, consider finding ways to increase how much you make so that you can aggressively tackle your credit card debt.

Here are some ways to increase the amount you make each month:

  • Work extra shifts or overtime if your company will allow you to. The money earned may add up quickly, especially if you get time-and-a-half or double-time.
  • Start a side hustle or work a second job temporarily. A side hustle will be more on your own time, whereas a part-time job might require you to work a specific schedule. Both can help you earn extra money to pay off your credit card debt, even if you just take the extra income for a few months.
  • Ask for a raise. One effective way to get a raise is to help solve your boss’s work-related problems so that you stand out as more valuable to the company.

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5. Use the Debt Snowball or Debt Avalanche Methods

There are two popular methods for paying off debt, and you can use them to pay off multiple debt sources, including credit cards.

Debt Snowball

The debt snowball method is when you pay the minimum payments to each debt account that you have, and then you apply all of your leftover monthly income to the debt with the smallest balance.

So, if you had three credit cards with balances $500, $1,000, and $2,000, you would pay the minimum payment on all three, and then apply any leftover money from your monthly income to the credit card with the $500 balance.

Once the $500 balance credit card is paid off, you'd apply leftover money to the $1,000 balance credit card, and so on.

By doing this, you pay off low balance debts first, creating a snowball of freed up money that can be used for the next debt.

Debt Avalanche

With the debt avalanche method, you pay the minimum payments for every debt that you have and then apply all extra money to the debt with the highest interest rate.

So, if you had three credit cards with APRs of 14%, 21%, and 24%, you'd pay the minimum payments to all three, then apply any additional money you have to the credit card with the 24% APR.

Doing this saves you the most money as you tackle high interest debt first. 

6. Credit Counseling

Suppose you’re still struggling to pay off your credit cards after budgeting, cutting spending, and increasing your income. In that case, you may consider looking into low or no-cost credit counseling, typically offered by banks, credit unions, nonprofits, and some religious establishments.

Credit counselors can help you develop a plan to pay back your debts in a realistic way while also assisting you in creating a budget that makes sense to you.

7. Debt Consolidation

Debt consolidation is when you take out a loan that pays back all of your other debts, consolidating your debt into a single payment with a single interest rate.

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Debt consolidation loans generally have lower interest rates than credit cards and other high interest loans.

You could also consider transferring your credit card balance to a balance-transfer card that has a low or 0% introductory APR. This has fees associated with it, and you’ll want to pay off the debt before the introductory period is over, or you’ll be assessed standard interest rates.

It only takes a few minutes to check your rates at Upstart. A personal loan may be useful for consolidating debt.

8. Debt Settlement

If you’re worried that you might not be able to pay back your credit card debt but don’t want to look into bankruptcy yet, then you might be able to settle your debts with a debt settlement company.

There are certainly risks involved with debt settlement, and this may not be in your best interest as you’ll incur fees, and there’s a chance you could owe more than you did initially.

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Settled debts hurt your credit score, and not all creditors will settle with you.

9. Bankruptcy

You may feel like you’ve sunk too far into debt and that there’s no way out. One way to get a fresh start is to consider bankruptcy. 

A bankruptcy attorney can go over your options. Most people have the option of either a Chapter 7 or a Chapter 13 bankruptcy.

A Chapter 7 bankruptcy is when your assets are sold to pay off your creditors, and all remaining debts are discharged. A Chapter 7 bankruptcy remains on your credit report for up to 10 years.

A Chapter 13 bankruptcy is when you establish a repayment plan to your creditors, and you keep your assets. This type of bankruptcy stays on your credit report for seven years.

Reach out to an experienced bankruptcy attorney to discuss options.

Additional Tips

As you pay down your credit card debt, here are some tips to help you be less likely to fall into credit card debt in the future.

Put Money Aside in an Emergency Fund

An emergency fund is a place where you stash money for unexpected expenses or if you lose your job. A high yield savings account is an ideal place for an emergency fund.

Most financial experts recommend having up to six months of living expenses stored in an emergency fund, though others say having a full year of expenses is even safer.

If you can’t save half a year of expenses, consider starting with just $1,000, as that will cover many smaller unexpected expenses.

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Curb Impulsive Spending

Take measures to not spend impulsively by making it harder to shop online. You can do this by removing your credit cards from online stores or employing the 7-day rule.

The 7-day rule is when you wait seven days from the time you get the desire to buy something to the time you buy it. In those seven days that pass, you may no longer want to purchase the item, saving you money by not doing so.

Wrapping It Up

Credit card debt can add up quickly when not taken control of. If you’re struggling to pay your balances, remember to budget, cut spending, and look for opportunities to make more money.

By working to improve your financial situation day by day, you’ll chip away at your credit card debt until the day that you pay it off.

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