How to pay off $5,000 in credit card debt

Our goal here at Credible Operations, Inc., NMLS Number 1681276, referred to as "Credible" below, is to give you the tools and confidence you need to improve your finances. Although we do promote products from our partner lenders, all opinions are our own.


If you want to pay off $5,000 in credit card debt, try these strategies to help you get out of debt sooner. (iStock)

Credit cards can be a valuable tool for building your credit history and earning rewards. But unexpected expenses and overspending can lead to an abundance of credit card debt. The average American owed $5,525 in credit card debt in early 2021, according to an Experian report

Not sure if you have too much credit card debt? Here’s how to tell if your credit card balances are too high, and some strategies for paying off $5,000 in credit card debt.

A personal loan can help you pay off your high-interest credit card debt. You can easily compare personal loan rates from multiple lenders using Credible.

How to tell if you have too much credit card debt

Different theories exist when it comes to how much debt you should have. Several large balances on multiple credit cards could indicate trouble on the horizon. On the other hand, high balances might be manageable if you also have high income and credit limits — although high balances come with higher interest costs.

You can use a couple metrics to figure out if you have too much debt, no matter your income or number of debts: your credit utilization ratio and debt-to-income ratio.

Credit utilization ratio

Excessive debt is bad for your finances, but it’s also bad for your credit score. One good way to get a clearer picture of your debt level is by calculating your credit utilization ratio. Credit utilization, which accounts for 30% of your FICO Score, measures how much of your available credit you’re using.

To determine your credit utilization ratio, divide the total amount you owe by your total credit limit. Say you carry a $3,000 balance on a credit card with a $10,000 credit limit — your credit utilization ratio for this card is 30% (3,000 / 10,000 = 0.3). 

Keep in mind, credit utilization applies to each card individually and all your cards collectively. If you have multiple credit cards carrying balances, 30% is your "per-card ratio." If you have another credit card with a $2,500 balance and a $5,000 credit limit, your overall credit utilization ratio is 37% (5,500 / 15,000 = 0.37).

Your credit utilization is important because it indicates how you manage your revolving credit. A low credit utilization ratio may demonstrate that you’re using revolving credit moderately but not necessarily depending on it. By contrast, lenders may view you as a credit risk if your credit utilization ratio is high.

A common rule of thumb is to keep your credit utilization ratio below 30%.

Debt-to-income ratio

Your debt-to-income (DTI) ratio is another measurement that can help you gauge whether your level of debt is cause for concern. DTI is the percentage of your gross monthly income that you use to pay your rent, mortgage, credit cards, and all other monthly payments. 

If your debt is too high, lenders may deny you home loans, auto loans, and other credit products. On the other hand, a low DTI may reassure lenders that you can afford a new loan.

You can calculate your debt-to-income ratio by dividing your total monthly debt payments by your gross monthly income. For example, if you have debt payments equaling $1,000 each month and your pre-tax income is $4,000, your debt-to-income ratio is 25% (1,000 / 4,000 = 0.25). The ideal debt-to-income ratio is typically below 43%. In the last example, adding a new loan with a monthly payment higher than $720 would raise your debt-to-income ratio above 43%.

Knowing how much debt you carry is an excellent first step to creating a budget and ultimately paying off your credit card debt.

Cut back on spending

When you’re paying off credit card debt, the more you can pay above your minimum monthly payment, the better. By cutting back on your spending, you can come up with the extra money you’ll need to make higher credit card payments — and ideally, pay off your credit card bill each month.

Start by looking through your recent transactions and identifying ways to cut back on unnecessary spending. Finding and canceling monthly subscriptions you no longer use can give you a quick win. 

Some bills you can’t escape, like utility bills. But that doesn’t mean you can’t negotiate a lower rate, especially if your state has multiple natural gas and electricity providers to choose from. All it takes is a quick phone call to request a lower rate, and it just might result in cash savings.

By looking at your expenses, you may discover where you’re overspending each month, such as streaming services or buying coffee out. Create a budget to plan how you’ll trim spending and avoid future debt.

Of course, cutting back on your spending won’t do much good if you continue to add to your credit card debt. Only use your credit card when it’s absolutely necessary — use cash or a debit card instead.

Refinancing your credit card debt with a personal loan may allow you to get a lower interest rate that could help you pay off your debt faster. Credible makes it easy to compare personal loan rates from various lenders, without affecting your credit score.

Pay off the highest-interest cards first

You can usually save more money by paying off high-interest credit cards first. The longer you wait to pay off cards with high interest rates, the more interest you’ll pay over time. 

Debt avalanche method

Paying off your credit cards with the highest interest rates first is known as the debt avalanche method. Start by listing all your credit card debts plus their interest rates, current balances, and minimum monthly payment amounts. Order your accounts from the highest interest rates to the lowest.

Continue to make minimum payments on each debt, but pay as much as you can toward the credit card with the highest interest rate. Once you pay off that card’s balance, you can then direct those funds toward the credit card with the next-highest balance, all while continuing to make minimum payments on your other accounts. Repeat the process until all your credit card debt is paid off. Using the debt avalanche method may save you money by eliminating your costliest debts first. 

Use a balance transfer card

What if you could pay down your credit card balance by paying a lower interest rate — or better yet — without paying any interest at all? Balance transfer credit cards offer low or even 0% annual percentage rates (APRs) — your interest rate plus any fees — for an introductory period. This period could last up to 21 months. With a 0% promotional offer, you can transfer your credit card balances to a balance transfer card and pay down your debt interest-free during this period.

While a 0% APR could deliver significant savings, you’ll generally need good to excellent credit to qualify for a 0% balance transfer card. And, as with any financial product, it’s wise to weigh all the pros and cons of balance transfer cards to determine if one makes sense for you.


  • You can consolidate your payments. Consolidating multiple credit card debts with one credit card account could make it easier to manage your payments. And since you’ll only have one payment to keep track of, you’ll be less likely to forget to make a payment on time.
  • You can save on interest. You’ll have considerable time to pay down your credit card debt with low or no interest.
  • You could pay off debt quicker. Paying less interest may shorten the time it takes to pay off your debts.


  • Your regular APR could be higher. If you don’t pay off the transferred amount before the promotional period expires, your APR will switch to the card’s regular rate, which could be higher than the rate on your current cards.
  • You may pay a balance transfer fee. Balance transfer cards usually come with balance transfer fees, typically around 3% to 5% of the amount you transfer. Make sure the fee isn’t so high that it negates your APR savings.
  • You could add to your debt. If you transfer your balances, but continue to use your original cards or other cards, you could pile on additional debt.

Take out a credit card consolidation loan

Like a balance transfer card, a consolidation loan allows you to combine high-interest cards and other debts into a single account with one fixed monthly payment. A debt consolidation loan may make sense if it lowers your APR. Of course, credit card consolidation loans come with benefits and drawbacks worth considering.


  • You could snag a lower interest rate. In November 2021, the average interest rate on a two-year personal loan with a commercial bank was 9.09%, while the average rate for credit cards was 16.44%, according to Federal Reserve data.
  • You can simplify debt management. It’s easier and more convenient to manage one payment rather than multiple payments.
  • You’ll have a deadline. Consolidation loans are for a specific time period, which means you’ll have an end date for paying off your debt, as long as you make your monthly payments on time.

You can see your prequalified personal loan rates when you compare rates from multiple lenders with Credible.


  • You may pay a higher interest rate. If you have fair or poor credit, you may not be approved for a debt consolidation loan with a lower interest rate, which could raise your costs.
  • You could make your debt worse. Debt consolidation may save you money and time. Be careful not to offset these benefits and add to your debt by making purchases outside your means with your credit cards after paying them off.
  • You may pay fees. Some loans come with origination fees, which are upfront fees that are taken out of your loan amount. You’ll also likely pay late fees if you miss a payment.