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

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How do you turn $20,000 into more than $33,000?

If you’re talking about credit card debt, all you need do is make minimum monthly payments. At a minimum payment of $400 a month at current interest rates, it will end up costing you $33,403 to pay off all the debt. That’s over eight years. If you don’t use the card.

That is too much credit card debt.

So how do you pay off $20,000 in credit card debt before interest rates devour your bank account?

It may sound hard, but all you need is determination and a plan. Here are the best ways to escape a $20,000 credit card black hole. Look them over and find an overall strategy that works for you.

Getting Started

You could try to get motivated by asking what $20,000 can buy. Among other things, it can get you a 45-night cruise to Antarctica and the Amazon, or 1,539 months of Netflix. But being a shopaholic is probably what got you into this fix and you are hardly alone. U.S. residents owed $980 billion in revolving debt in 2021, much of that for credit cards. While that’s a little lower than what they owed before the coronavirus outbreak, it’s still a staggering number. If you’re in that bind, the first thing you might need is an attitude adjustment.

Get Your Mind Right

Take ownership of your situation. You might have been laid off, or your ex-spouse could have cleaned you out in a divorce, but Visa, Mastercard, American Express and Discover don’t care about your excuses. The best revenge is to pay off your cards ASAP. That’d tell them where they can stick that $13,403 in interest.

Put Your Credit Cards in a Deep Freeze

Credit cards are your sworn enemy. Keep one for emergencies, but do not put another discretionary dime on it. That dime will cost you much more than 10 cents. The average credit card interest rate in 2021 was 16.13%. It may not seem like a lot at face value, but the way the interest is charged, what you owe can go up fast. Take a look at how a simple percentage point in payment can affect what you pay overall:

If you owe $20,000 and make a 3% payment a month — $600 — it would take 45 months to pay that off and you’d accrue $6,707 in interest.

If your minimum payment is 2%, or $400, you’d rack up $13,403 in interest.

Paying $274, or close to 1%, the standard minimum on some cards means you would accumulate $61,488 in interest and it would take you 298 months to pay it off.

You don’t even want to know what a 29% interest rate would cost at those minimum payments.

Develop a Debt-Payoff Strategy

A great place to start is nonprofit credit counseling. Credit counselors can take a look at your financial situation during a free 20-40 minute session and recommend a debt relief solution that suits you. That could be a debt management plan or any of the other strategies on this list.

Debt Management Plan

Under a debt management plan, you enroll in a structured program offered by a nonprofit credit counseling agency like InCharge Debt Solutions. Your payments are consolidated, and creditors agree to reduce interest rates to an affordable rate. Instead of making a bunch of payments each month for your credit card problem, you make only one to the agency. The lower interest rate saves you a lot of money. Credit counselors from the agency also help you set up a budget and will guide you through the program, which typically takes three to five years to complete and comes with a small fee.

Does it work? It does – if you work at it.

D-I-Y Debt Snowball/Avalanche

There are two popular D-I-Y approaches to chipping away at debt. You can pay off the smallest credit card debt first, which might give you more motivation to pay the next-largest, then the next and so on. That’s the snowball method.

The avalanche method is to pay off the credit card with highest interest rate first, then work down. From a purely financial standpoint, the debt avalanche makes more sense, but some people like the momentum aspect of the snowball method.

Get a Loan

Ideally, you’d have a rich uncle or a friend who’d loan you $20,000 interest-free to pay your cards off. Since that’s not likely, you could apply for a debt consolidation loan through a bank, credit union or online lender. The interest rate would vary depending on your circumstances, but it would almost certainly be lower than what your credit cards are socking you with. If you own a house, you might consider getting a home equity loan or line of credit. Just remember, your house would become your collateral. If you default, you could lose the roof over your head.

Debt Settlement

This is an option if your situation is dire and credit card companies are convinced they’ll never get the full amount you owe. You negotiate and agree to make a one-time payment for a percentage of what you owe, optimistically somewhere close to 50%. You can hire a company to negotiate for you, but beware of scam artists who charge exorbitant fees. The upside of debt settlement is that you could get half of your original balance forgiven. The downside is a debt settlement stays on your credit report for seven years and will wreck your credit score. It might end up costing you more in the long run.

Borrow from Your Retirement Plan

Raiding your IRA or withdrawing money from your 401(k) is not a prime option, since there is a 10% penalty if you withdraw money before age 59½. It became temporarily less risky after Congress approved the first COVID-19 stimulus bill in March 2020, which allowed those hit with a hardship related to the pandemic to withdraw up to $100,000, waived the 10% penalty and gave three years to pay it back. That plan lasted until March 21, 2021. After that, the old rules apply, which means a high fee, taxes on the money withdrawn and higher income related to how the withdrawal affected your income. And, with the interest accumulation lost, less money for your retirement.


Bankruptcy is the last of the last resorts. Under Chapter 7, you give up just about everything you own to pay off lenders. Your may keep “exempt” items that you truly need like your house and car, but gone is the wide-screen TV, jewelry, artwork and anything else of value deemed non-essential that can be sold to pay off creditors. Your debt’s gone, but so is most of your stuff.

The alternative is to file bankruptcy under Chapter 13. You enter a court-supervised repayment plan that lasts three to five years. Either approach will wreck your credit score and make future loans difficult to get.

A Chapter 13 stays on your credit report for seven years. A Chapter 7 stays for 10 years.

If you have $20,000 in credit card debt, you can relate. Whatever strategies you use to pay that off, it can be done.
Once you do it, you can treat yourself to a nice cruise. And you’ll be smart enough not to put it on a stupid credit card.

About The Author

Tom Jackson

Tom Jackson focuses on writing about debt solutions for consumers struggling to make ends meet. His background includes time as a columnist for newspapers in Washington D.C., Tampa and Sacramento, Calif., where he reported and commented on everything from city and state budgets to the marketing of local businesses and how the business of professional sports impacts a city. Along the way, he has racked up state and national awards for writing, editing and design. Tom’s blogging on the 2016 election won a pair of top honors from the Florida Press Club. A University of Florida alumnus, St. Louis Cardinals fan and eager-if-haphazard golfer, Tom splits time between Tampa and Cashiers, N.C., with his wife of 40 years, college-age son, and Spencer, a yappy Shetland sheepdog.


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