How to Pay Off $20,000 In Credit Card Debt

Credit card interest rates hover around 28% in 2024. At that APR, a $20,000 balance paid off at the minimum amount due each month will take over 13 years and $76,000 to accomplish if nothing else is charged to the account.

If your credit card debt and personal loan debt have exceeded $20,000, you’re not alone, and there are steps you can take toward a solution.

How to Pay Off $20,000 In Credit Card Debt

Several methods exist for helping pay down credit card debt. Here are the top three ways to pay off $20,000 in credit card debt.

Debt Consolidation

The best way to pay down debt is also the simplest. Debt consolidation combines revolving debt and credit card debt amounts into a single payment, typically at a lower interest rate than the combined existing average. Debt consolidation can reduce monthly payments and shorten the time it takes to pay down debt. The process is only available for unsecured debt or debt that doesn’t have collateral associated with it. This means that it can be a powerful tool for those with $20,000 or more in credit card debt.

Many lenders offer debt consolidation loans in amounts ranging from $1,000 to $50,000 or more. Some companies may have higher minimum amounts. The best debt consolidation lenders offer several perks, which can include pre-qualifying before committing to a loan, the ability to shop around for the best deal, and the ability to get a loan with less-than-perfect credit in many cases.

Best Debt Consolidation Companies for $20,000+ In Credit Card Debt

Get a Better Interest Rate

There are a couple of ways to obtain a better interest rate on your credit cards.

The first method is to simply call your card issuer and ask for a lower APR. It’s completely up to the company whether or not to lower it. However, credit card companies aren’t fans of losing customers. While you may not receive a huge APR drop, any little bit helps and will lower the cost of the debt over time. You’ll need a solid credit record with the issuer to be considered for a lower rate, but it’s worth a shot if you have that.

The other method only works if you have a good credit score. In general, smaller banking institutions tend to offer credit cards with lower interest rates than the large card issuing companies. Almost half of large lending companies have credit card offerings with over 30% interest, while smaller banks often issue cards with 10% or more lower APRs. If you have the means to give up cards from large providers and replace them with cards from a smaller bank, it may be worth the effort. However, remember that applying for new cards will temporarily negatively affect your credit score

Snowball

The snowball method of paying down debt works best for those who hold balances on many cards or loans. While there are variations on the theme, the snowball method includes paying the minimum payments on most debts and paying extra on the smallest debt first until it’s paid off. The next step involves using the would-be payment from the former smallest debt to apply to making a larger payment each month on the next smallest debt, and so on.

The process takes planning, record keeping, and a fair amount of discipline, but it can work well to eventually lower overall debt amounts for borrowers with multiple accounts open.

Understanding Loan Rates

1. Credible – Rates for personal loans provided by Credible range from 6.40% to 35.99% APR with repayment terms from 12 to 84 months.
2. LendingTree – Rates for personal loans provided by Lending Tree range from 5.99% to 35.99% APR with repayment terms from 12 to 120 months.
3. LendingClub – Rates for personal loans provided by LendingClub range from 9.57% to 35.99% APR with repayment terms from 24 to 60 months.
4. Upstart – Rates for personal loans provided by Upstart range from 7.8% to 35.99% APR with repayment terms from 36 to 60 months.

Personal loan offers provided from the lenders on this page will have a rate no higher than 35.99%, with repayment terms ranging from 36 to 72 months. Actual rate depends on credit score, loan term, and other factors. Please visit the lender’s website for a representative example of the total cost of the loan, including all applicable fees.

A representative loan example: For a $10,000 personal loan with a 36 month repayment term, 18.49% APR (including a 5% origination fee), you would receive $9,500 and your required monthly payments would be $346.65. Over the life of the loan, you would pay back a total of $12,479.52. The APR for your loan may be higher or lower than this amount. Actual rate depends on credit score, loan term, and other factors. Please visit the lender’s website for a representative example of the total cost of the loan, including all applicable fees.

*Loans typically fund between one and five business days depending on the lending partner and your application.