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Reduce Credit Card Debt Without Hurting Credit Score

Updated: Jul 7, 2021

Having too much credit card debt can make your life miserable. So, if you have multiple, high-interest credit card debts to pay off, you may choose to consolidate them through one repayment option.

Doing so can help you to manage your finances, lower the overall interest rate, save more on interest payments, and provide support to pay off your credit debts faster. Another option you have to manage your credit card debt is opting for a settlement program.

As per the, “Debt settlement programs typically are offered by for-profit companies, and involve the company negotiating with your creditors to allow you to pay a “settlement” to resolve your debt. The settlement is another word for a lump sum that's less than the full amount you owe”.

While this method allows you to pay less than the amount you owe, it does damage your credit score. Therefore it is not a preferred method, but could be used if the credit card debt is too out of control.

Why is credit card debt so harmful?

When it comes to the deadliest debt, credit card debt is one of the most harmful. Why? It’s because credit card debt charges higher interest to the consumer compared to other debts. Credit card interest also compounds, meaning that interest charges accrue more interest for the lender.

Credit card companies attract consumers with a low introductory APR and a high credit limit. But that introductory APR offer normally expires relatively quickly, and consumers can find themselves trapped underneath an overwhelming pile of debt. Eventually, they come out with a big interest and debt repayment burden upon their shoulders that’s difficult to afford.

Credit card debt is considered revolving debt, which typically has very high-interest rates. So, if a consumer falls into this debt cycle, it will be difficult for them to get out of that trap and become debt-free.

When a consumer can’t afford to pay the entire credit card debt at a time and just makes the minimum payment each month, the interest begins to add up fast and increases total debt significantly. It may take a long time to pay off such debt balances. The problem becomes severe if the consumer has multiple credit cards with multiple outstanding balances to pay off.

Fortunately, there are some decent ways to get out of your credit card debt without affecting your credit score. Let's dig deep into the discussion and find out how much those options can help you to manage your credit cards and save more.

Work on DIY debt repayment strategies

If you have credit card debt to pay off, then the best way to manage those credit cards and also your finances, is by working on DIY debt repayment strategies.

First, you should concentrate on preparing a solid household budget and reducing expenses. You can then use the money saved to pay off your credit cards outstanding bills and become debt free faster.

You may need to analyze your monthly expenses to determine from which category you may cut off expenses. Avoiding useless expenses or avoiding luxury items may help you with this task.

You will have to select one debt-repayment method to deal with your credit card debts. The two most popular debt repayment methods are as follows:

a. Debt snowball, and

b. Debt avalanche method.

With the debt snowball method, you have to list all your credit card debts, based on their debt amount and start paying off from the smallest balance first, while making the minimum payment to all the other cards every month.

With the debt avalanche method, you have to list all the credit card debts according to their interest rates, from the highest to the lowest. You need to start paying off the account with the highest interest rate and put as much as possible towards it. Once it is paid off, target the next account with the highest rate.

The best thing about choosing such a strategy is you’ll be paying off all the credit card bills completely, so your credit score will remain unharmed.

Take out a debt consolidation loan

Another option to get out of credit card debt as well as keeping your credit intact is taking out a debt consolidation loan or a low-interest personal loan.

These loans are offered at a low-interest rate, compared to high-interest credit cards. So, you may apply for a personal loan and pay off all the credit card balances at once.

This way you can save a decent amount of money from the interest payments, and your credit utilization ratio will be reduced as well. As per the credit bureau Experian, credit utilization is defined as “the amount of revolving credit you're currently using divided by the total amount of revolving credit you have available. In other words, it's how much you currently owe divided by your credit limit. It is generally expressed as a percent”.

No harm will be done to your credit as you are paying off credit cards in full. A debt consolidation loan can be taken to pay off several debts such as payday loans, utility bills, medical bills, etc.

Now, you just have a single personal loan to deal with. The loan has a lower-interest-rate so you may easily handle the payments every month. Of course, you might need to negotiate with the lender and negotiate your loan term and interest rate. Don’t forget to make regular payments on your new loan every month, or else late payments may damage your credit score.

Get a 0% balance transfer card

The balance transfer method is one of the most popular and successful methods to consolidate high-interest credit card debts. You need to apply for a balance transfer card to transfer all other credit card balances.

Depending on your credit, credit card companies will offer you a low-interest rate or a 0% APR balance transfer card. With this account, the initial 0% interest rate will be valid for a certain period, like 12 to 18 months, for example. During that time, the credit card company won’t charge any interest on the balance you have transferred. So, you’ll have time to pay off the balance as well as save money from the interest.

Beware, if you do not pay the balance within the introductory period, the 0% APR will be converted to a normal high-interest rate.

Other options

The above-mentioned strategies are the most popular methods to pay off credit card debts without hurting your credit. There are two other options available, borrowing money from a qualified retirement account, such as an IRA or 401(k), and borrowing money from your home equity (cash-out-refinancing). Just FYI, borrowing money from refinancing your home affects your credit score.

It is suggested that you avoid these two methods because if you fail to pay these two loans, there is a greater chance you would lose your retirement savings and your house as well.


So, you have several decent options to tackle your credit card debt without hurting your credit score. You may choose DIY options (debt snowball or avalanche) to manage your credit cards on your own. You can take out a debt consolidation loan and pay off all credit card bills at once. You have the option to transfer your high-interest credit card balances into a 0% APR card and pay off the balances without paying a single dollar as interest. It is also one of the fastest ways to pay off credit debt.

No matter what option you select, you must always consider your financial status, affordability, and potential risks before choosing a particular option. You’ll be one step ahead toward your goal if you have steady income and earn extra money by doing side hustles. Good luck!


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