Paying off $20,000 in credit card debt without taking out any other debt can be challenging, but it’s definitely possible with the right strategy.
First STEP,
Create a budget. Track your income and expenses to know about your money payment/ expenses. Identify areas where you can cut back, even if it’s just a little. Every dollar you save can go toward paying down your debt.
Next STEP,
Focus on the debt with the highest interest rate. Make the minimum payments on all your cards, but put any extra money toward the card with the highest interest rate. This will save you the most money in the long run by reducing the amount of interest you pay.
Consider taking on an extra job to supplement your income or selling items you no longer need. Any extra cash can make a big difference in paying off your debt faster.
Talk to your creditors. Sometimes, if you explain your situation and show that you are committed to repaying your debt, they may be willing to lower your interest rate or waive the fees.
Always remember, paying off debt requires discipline and patience, but you can do it. Stay committed to your plan, and you will see progress over time. You have the power to deal with this, and every step you take gets you closer to being debt-free.
Credit Card Loan of $20,000 would take 47 months with payments of $600 per month
(Assuming an average credit card APR of about 18%).
The time it takes to pay off the balance depends on how often you make payments, how large your payments are, and what interest rate the lender charges. Increasing your payment to $2,400 per month, for example, would reduce your repayment schedule by 9 months.
Examples of “how long it would take to pay off $20,000 on a credit card” as follows-
If you pay $600 per month, it would take 47 months to pay off $20,000.
If you pay $1,200 per month, it would take 20 months to pay off $20,000.
If you pay $1,800 per month, it would take 13 months to pay off $20,000.
If you pay $2,400 per month, it will take 9 months to pay off $20,000.
Please Note: All examples assume an average APR of 18%.
With credit cards and other lines of credit, you can technically take as long to pay off $20,000 as long as you always make at least your required minimum monthly payment. You can use WalletHub’s credit card calculator to figure out how long it will take you to pay off $20,000 with typical interest rates and monthly payments.
Finally, it’s worth noting that other types of borrowing, such as personal loans, mortgages, home equity loans, car loans, and student loans, will give you a fixed repayment period from the start. You won’t need to figure out how long it will take to pay off the balance. But you can pay off your balance in less time by making larger monthly payments. Just make sure your lender doesn’t have a penalty for early repayment—most don’t.
How You Pay Off $20,000 In Credit Card Debt In 3 Years Or Less Time?
It can be easy to accumulate credit card debt, especially in today’s inflationary environment. And, nearly half of the American population currently owes money to credit card companies. About 56 million of them have revolving loans that are due for more than a year.
If you’re facing a large amount of debt, you may be looking for ways to pay it off quickly. And, it’s understandable to realize that these revolving accounts can be expensive since they often come with high interest rates.
- But what if you have $20,000 in credit card debt and you want to pay it off in three years or less?
- What are some ways to do that?
Find out how debt relief can help you pay down your credit card balance.
How to Pay Off $20,000 in Credit Card Debt in 3 Years or Less Time?
If you have $20,000 in credit card debt that you need to pay off in three years or less, you have several options to consider, including:-
Take Advantage Of A Debt Relief Service
Here in this article about- how long will it take to pay off $20 000 in credit card debt, One possible way to get rid of debt quickly is to take advantage of what a debt relief service offers. If you don’t see any possible way to pay off your credit card balance, a debt relief program can make it possible.
Debt relief companies typically offer one or both of the following services:-
Debt Management-
Debt management involves specialists negotiating with your lenders in an attempt to lower your interest rate. Generally they create an affordable, effective payment plan to help you pay off your debt as quickly as possible.
Debt Forgiveness-
Credit card debt forgiveness, or debt settlement, is a program that involves negotiation with your lenders in an attempt to reduce the total amount you owe, resulting in the lender forgiving a portion of your debt. While these programs can hurt your credit score and have potential tax implications, they are a viable option for borrowers who are struggling to make the minimum payments on their credit cards.
With either option, debt relief companies typically attempt to get you debt-free within 24 to 48 months. Therefore, it’s likely that they’ll be able to help you pay off your $20,000 debt in three years or less.
Consolidate Your Debt With A Home Equity Loan
It may also be smart to look at your home equity as a potential credit card debt solution.
“Taking advantage of a home equity loan is a good option when it comes to debt consolidation,” says Eileen Tu, vice president of product development at Rocket Mortgage.
“Often, an unsecured line of credit like a credit card has higher interest rates than a home equity loan.”
Interest has a big impact on the time it takes to pay off credit card debt, so using a home equity loan to lower your interest rate can save you time and money. So, “it may make sense to use your home equity to consolidate those debts into a lower interest rate,” Tu says.
Considering the difference between the average home equity loan interest rate – which averages 8.97% today – and the average credit card interest rate – which currently exceeds 20% – a home equity loan that can be consolidated to pay off your credit card debt may make it easier to pay off your balance. Doing so may make paying off your $20,000 credit card debt in three years more realistic.
Take Advantage Of A 0% Balance Transfer Credit Card
If you have a good credit score and aren’t having trouble making the minimum payments but want to pay off your debt faster, a balance transfer credit card can help. These credit cards often have promotional 0% rates or low interest rates that can make paying off your balance easier.
So, it may be worth considering transferring to a 0% interest balance transfer credit card to help you pay off your debt faster. If you haven’t paid off the full balance by the time the promotional interest rate ends, find a new balance transfer credit card with a 0% promotion to transfer your balance to — and continue doing so until you’ve paid off your debt.
Keep in mind that at 0% interest, you’ll need to pay more than $550 per month to pay off $20,000 in three years. Additionally, balance transfer credit cards typically come with transfer fees. So, you’ll need to consider these fees as part of a debt repayment plan.
So finally in short we can say that having a $20,000 balance on a credit card may feel like a lot you have to pay. However, you don’t have to struggle with your debt forever. By taking advantage of one of the options above, you may be able to pay off your balance in three years or less.
These Are The Best Ways To Avoid A $20,000 Credit Card Black Hole.
Check them out and find an overall strategy that works for you.
The Benefits of Debt Repayment
Let’s start by emphasizing the positives. Imagine a future without credit card debt. Those wish-list items you’ve always wanted for yourself and your family?
- A new home?
- New car?
- Even a new job?
- A dream vacation?
- College tuition for the kids?
- A comfortable retirement?
When you’re out of credit card debt, those goals are within reach.
A mortgage on a new home can finally be obtained, for example, when your debt-to-income (DTI) ratio is under control. Most lenders want your DTI ratio to be around 43% or lower before they’ll approve a mortgage for you. Getting rid of a large credit card balance, along with any other outstanding monthly loan payments you owe, can help you stay well under that 43% dividing line.
Plus, once you’re debt-free, you’ll likely have no issues with your credit score the next time you apply for a job. Employers in industries like law enforcement, financial services, the military, and more often make checking your credit history a standard part of the application process. Why? Because they understand that the more debt you have, the more vulnerable you are to bribery.
It won’t be an issue in that cool future career you’re imagining right now.
And don’t underestimate the health benefits of being debt-free. It’s true:
Debt causes stress. According to a 2020 CreditWise survey, borrowing too much money is one of the biggest contributors to the kind of debilitating anxiety that can negatively impact your well-being. It’s been linked to high blood pressure, migraines, a weakened immune system, and heart arrhythmias, among other physical symptoms.
So as long as you’re imagining a future without debt, imagine yourself feeling better.
Now, let’s figure out how to get you to that future.
Start Paying Off Debt
You can try to get motivated by asking what $20,000 could buy. Among other things, it could get you closer to a 45-night trip to Antarctica and the Amazon. Or, something like 2002 months of Netflix Basic. But remember: Being a shopaholic is probably what got you into this problem in the first place.
Hearing this won’t make you less stressed, but you’re hardly alone. According to a preliminary August report from the Federal Reserve Bank of New York, U.S. residents owed $841 billion on credit cards in the first three months of 2022, and they paid off $46 billion in the second quarter (April to June). Although this is less than what was owed before the coronavirus outbreak, it’s still a staggering number.
Overall, household debt was 2%, or $312 billion, higher in the second quarter of 2022 than it was in the first quarter. If you’re contributing to those numbers, the first thing you may need is an attitude adjustment.
Get Your Mind In to Right Side/ Positive
Well, we’ve focused on the good things waiting for you on the other side of your debt. Now it’s time for a reality check. Emphasize the positives while eliminating the negatives. But first, you need to know what those negatives things are involved. You need to know what happens if you ignore $20,000 in credit card debt.
Late fees will apply.
Interest will accrue at an increased penalty rate.
Your account will be closed (though you’ll still have to pay the bill).
Eventually, the credit bureaus will be notified, meaning credit scores will drop.
Keep ignoring payments, and debt collectors will do it. They’ll start calling — or worse, ringing your doorbell.
Lawsuits? They might, too. Keep it up, and your paycheck, even your bank account, could be garnished.
Get it? It’s ugly.
So, take control of your situation in how long will it take to pay off $20 000 in credit card debt. You may have been fired from your job, or your ex-spouse may have garnished you in the divorce case, but Visa, MasterCard, American Express and Discover still want to be paid.
The best solution is to pay off your cards as soon as possible. That will let them know where they can pocket $22,644.95 in interest.
Put Your Credit Cards In A Deep Freeze
Credit cards are your worst enemy. Keep one for emergencies, but don’t put another discretionary amount of money on it. That money will cost you more than 10 cents. As of July 2022, the average credit card interest rate was 17.92% at the beginning of August 2022, an all-time record high.
At face value this might not seem like a lot, but because of the way interest is charged it can add up fast. Take a look at how a simple percentage point in payment can affect your overall payment:-
If you owe $20,000 and you pay 3% ($600) per month it will take 39 months to pay it off and you will rack up $6,586.62 in interest.
If your minimum payment is 2%, or $400, you will accrue $10,220.26 in interest.
Paying $200 or 1% (the standard minimum on some credit cards) means you will accrue the $22,644.95 in interest as we mentioned above and it will take you about 10 years (118 months) to pay it off. You will pay back more than double your starting balance and will take about 10 years to do so.
You also don’t want to know how much a 29% interest rate on those minimum payments will cost.
Review Your Credit Report
Do it now. Do it later. In fact do it at least once a year. (It’s free once every 12 months!) But it’s important to review your credit report now that you’re starting the process of getting yourself out of that credit card debt, if you want to make sure it’s accurate. What you’ll find is information about your credit accounts, your credit limits, your current balance, and your payment history.
See something amiss? Now’s the time to address it.
Then, by checking it regularly, you’ll be able to see what progress you’re making toward eliminating your debt. Do you want to know that how to improve your credit score?
Your credit report will give you regular check-ins about its status. It is a big part of taking ownership of your loans/finances. There are options for paying off debts with bad credit, but your options are much more attractive if you’re able to improve your credit score.
As we are discussing about credit card pay off, so there are 3 major credit reporting bureaus- Equifax, TransUnion & Experian. However, to request your free credit report, you only need one website i.e. www.annualcreditreport.com.
Make A List Of Everything You Owe
If this sounds like the beginning of a budget… well, it is. (We’ll get deeper into the budgeting process in a moment.) Once you have all of your outstanding debts in front of you and in one place, you can calculate the size of the total payment you’ll need to make. Stay updated on your debts and begin the process of reducing them.
This is an other reason to review your credit report. It will list the amounts owed on each of your accounts, some of which you may have overlooked.
At any rate, make sure your list includes your auto loans, your outstanding student loans, your mortgage, any other personal loans you have, and (of course) your credit card debt. Note the interest rate and monthly payment owed for each debt. Add those monthly payments together and…voila! You know what you’re up against.
It can be scary. But now you understand the challenge. You’re taking ownership of it.
How To Pay Off Debt?
A good place to start is nonprofit credit counseling. Credit counselors can review your financial situation during a free 20-40 minute session and suggest a debt relief solution that’s right for you. It could be a debt management plan or any of the other strategies on this 9 point list that will help you stay above water.
- Debt Management Plan
Under a debt management plan, you enroll in a structured program offered by a nonprofit credit counseling agency like In Charge Debt Solutions. Your payments are consolidated, and creditors agree to reduce interest rates to an affordable rate. Instead of making multiple payments each month toward your credit card problem, you make just one payment to the agency.
In this way, the lower interest rate saves you a lot of money for you. The agency’s credit counselors will also help you set a budget and guide you through the program, which typically takes 3-5 years to complete and comes with a monthly fee that’s built into your monthly payment.
Does it work? It does — if you work at it.
- The D-I-Y Debt Snowball
There are two popular DIY debt planning approaches to overcoming the $20,000 hole you’re in. You can pay off the smallest credit card debt first, which may give you more incentive to pay off the next largest amount, then the next and so on. That’s how snowballing works.
The avalanche method is to pay off the credit card, firstly with the highest interest rate and then work down. From a purely financial perspective, debt snowballing makes more sense, but some people like the speed aspect of the snowball method.
- Debt Consolidation Loans
Ideally, you’d have a rich uncle or friend who would loan you $20,000 interest-free to pay off your cards. Since that’s unlikely, you can apply for a debt consolidation loan through a bank, credit union or online lender. The interest rate depends on your circumstances, but it will almost certainly be lower than what your credit cards cost.
For an example, If you own a home then you might consider taking out a home equity loan or line of credit. Just remember, your home will become your collateral. If you default, you could lose the roof under your head i.e. your home.
- Debt Settlement
This is an option if your situation is dire and the credit card companies are sure they’ll never get the full amount you owe. You negotiate and agree to make a lump sum payment for some percentage of what you owe, hopefully around 50%. You can hire a service provider company to negotiate for you, but-but-but.. beware of scam artists who charge heavy/exorbitant fees. The upside of debt settlement is that you can get up to half of your principal forgiven. The downside is that debt settlement stays on your credit report for seven years and will destroy your credit score. This can end up costing you more in the long run.
- Lower Your Interest Rates
This doesn’t sound like a big deal, right? If you can do this, your monthly payments will be lower and you’ll have more money for other things you need.
So, question like this:
How do I do this?
How do I lower my credit card interest rate?
For openers, you can just ask. (Talking without thinking!) Call your credit card company and request a lower rate. Sometimes, the company offers a lower rate than you’re paying. Before you call, of course, a little research on that possibility can be helpful.
If you have a handle on all of your accounts and what interest rate you’re paying on each of them, you may be able to transfer the higher rate debt to a lower rate line of credit. The easiest way to do this is to transfer the balance of the credit card with the higher interest rate to another card with a lower rate.
In fact, you can consolidate all of your credit card debt into one account which will lower the interest rate and consolidate all of your monthly payments into one account.
A nonprofit credit counseling agency like In Charge Debt Solutions can help with this type of debt consolidation.
- Create A Budget
As promised, here’s a (modest) in-depth look at budgeting. Once you have a budget and learn to stick to it, it will prevent you from overspending. (That’s how you got yourself into that $20,000 hole, right?) A budget can get you on the road to erasing that credit card debt. It can also lead you to big-ticket purchases like a new car or new home, as well as guide you to a more comfortable retirement in the future.
As we mentioned earlier, start by making a list of everything you own, along with all of your other monthly expenses. Then make another list that shows each of your household income sources and how much each contributes on a monthly basis. Compare those two lists and see where you stand. Are you taking in more than you spend? It’s not only good but it’s the best!
But if you’re spending more than you make, it’s time to make a decision. Since you have a list of monthly expenses in front of you, it’ll be easier to choose where you can cut back.
Of course, your own budgeting process might not be as simple as we make it out to be. But you can get more detailed help here: How to Create a Budget. And here’s a handy budget calculator to help you with the math!
- Pay Your Bills On Time
Your creditors love it when you do. When you don’t pay your bills on time, they’re not happy with you and they’ll find ways to let you know. Late fees. Penalty rates. All those things we mentioned earlier. So, make it a point to remember when your payment is due each month (and work on your memory!). There’s no need to make matters worse.
You might as well be smart about how you do it. If you’ve got a few extra dollars in your pocket going for you, add them to paying off the credit card with the highest interest rate. Or maybe eliminate one of your debts faster by putting a little extra in the account with the smallest balance.
If you can’t pay on time, it’s time to look into a debt management plan or debt consolidation loan.
- Borrow From Your Retirement Plan
Sure, this can be done, but it’s way down on the list of good options. Raiding your IRA or taking money out of your 401(k) isn’t a good option, as there’s a 10% penalty if you withdraw money before age 59½. Additionally, you’ll have to pay income taxes on any money you withdraw from a traditional IRA. Roth IRA rules are a little different, but you could still owe taxes if you withdraw money early.
Between the higher fees and taxes on the withdrawn money, you’ll likely pay more for the credit card debt you’re trying to eliminate. Interest stops accumulating, and you have less money for your retirement.
- Bankruptcy
Bankruptcy is a last resort. Under Chapter 7 bankruptcy, you give up everything you own to pay creditors. You can keep the “free” items you really need, such as your home and car, but wide-screen TVs, jewelry, artwork, and anything else deemed unnecessary can be sold to pay off creditors. Your debt is gone, but most of your property is gone, too.
So the alternative is to file bankruptcy under Chapter 13 bankruptcy. You enter into a court-supervised repayment plan that lasts three to five years. Either approach will destroy your credit score and make it harder to get credit in the future.
Know more about credit card pay off in how long will it take to pay off $20 000 in credit card debt?
Debt Collection
Remember at the beginning when we talked about doubling the depth of the financial hole? We said that making the minimum monthly payments on a $20,000 credit card balance could cost you an additional $22,000 and take about 10 years to get out free and clear. We also said this, which is the key part: This is when you don’t make any other purchases with the credit card.
In other words, recovery from old debt involves avoiding new debt. This process requires self-control, determination, persistence, the ability to resist impulse purchases. (Say no to those 2,002 months of Netflix Basic!) You can’t be a shopaholic and expect to get out of credit card debt, so put the plastic away.
Even if you’re taking a proactive step like transferring your existing balance to another card with a lower interest rate, keep that new card under lock and key if possible. Or at least make sure you have the means to pay for the expenses you make at the end of each month.
And remember that taking out a personal loan to pay off credit card debt comes with its own set of consequences: It’s new debt, too. You have to pay for it.
Hey, no one even said it would be easy.
Final Word/ Getting Help With Debt
If you have $20,000 in credit card debt, you can tell. No matter what strategy you use to overcome it, it can be done. And you don’t have to do it alone. Quick access to a nonprofit credit counselor for debt help can put you on the road to solvency.
When you call InCharge Debt Solutions, a credit counselor will ask a few simple questions about your income and expenses and begin a conversation about the best ways to manage the credit repair work you need. If the best option is a debt management program, the InCharge counselor can suggest a plan that can lower the interest rate on your credit card debt by as much as 8%. (Remember, the average credit card interest rate was 17.92% as of early month of Aug., 2022.)
It’s important to note that although a debt management program requires you to make monthly payments, it’s not a loan. You can opt out of this program at any time. But if you follow through and make timely monthly payments, you can eliminate your credit card debt in three to five years.
Give us a call and get the help you need.
And when it’s all said and done, maybe you can enjoy a nice trip to Antarctica. The best part? You’ll be smart enough not to put it all on a silly credit card.
Yours True Friend & Finance Advisor
Harry Bhagria
About Me...
My interest in finance and business started early since childhood. I have
extensive experience managing finances, running businesses and advising on
loans. My expertise includes Credit Cards, Business Loans, Personal Loans,
Vehicle Loans, Education Loans and the Stock Market.
My main Objective, Aim & Goal of life is to share my knowledge with everyone,
even those unfamiliar with finance, so they can understand how to effectively
manage money and grow their wealth....
....HARRY BHAGRIA....Know More in Detail...