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Looming in front of you is a seemingly insurmountable mountain of debt. Purchases and interest have accumulated over the years to reach a five-figured sum that starts with a crooked number. Now you wonder – how is it possible to pay down $20k in credit card debt?

Today, we want to explore just how long the journey might take based on which pay down approach you choose. The examples we will walk through assume all credit card payments will be made on time. Missing payments can incur penalties, or even worse, interest rate hikes. Either can quickly throw your debt pay-off plan into a tailspin.

We understand life happens, and circumstances can change. But don’t fret! Reading this article is a sign you are ready to tame your debt beast. With that, let’s peer into different pay down tactics and how long it will take to reach a balance of zero.

Paying Only the Minimums

Credit card companies are in the business to make money – they are not your friend. Enticements such as points and miles are used as lures to use your card in the hopes you are unable to pay back your entire balance. Interest is what makes credit card companies (and their stockholders) very wealthy.

Paying only the minimum on your credit cards is the surest way to help credit card CEOs retire handsomely. By far, this is the longest path to becoming debt-free. How long it will take to pay down $20k in credit card debt by paying only the monthly minimum depends on your interest rate.

Assuming each monthly payment equals 4% of your remaining balance, which is typically more than the minimum amount, here is the length of time it will take to pay down $20k at varying interest rates:

  • At 4.99% it will take 135 months
  • At 9.99% it will take 151 months
  • At 14.99% it will take 172 months
  • At 19.99% it will take 200 months
  • At 24.99% it will take 241 months

Even at an exceptionally low-interest rate of 5%, it will still take more than 11 years to pay off your debt. What gives?

As you make your minimum monthly payment, a portion goes towards reducing your principal balance. In turn, the next month’s minimum monthly payment will be slightly lower. This extends the time needed to pay down debt compared to paying the same amount every month.

Paying the Same Monthly Payment

Instead of paying only the decreasing monthly minimum payment each month, let’s look at paying an amount equal to the first month’s minimum every month. For example, the first month’s minimum payment at 4% of your $20,000 balance would be $800. If we pay $800 a month every month, the repayment timeline looks something like this:

  • At 4.99% it will take 27 months
  • At 9.99% it will take 29 months
  • At 14.99% it will take 31 months
  • At 19.99% it will take 33 months
  • At 24.99% it will take 36 months

Whoa! Instead of taking a decade before the slightest sight of becoming debt-free, we’ve cut the time frame down to just a few years. This occurs because each month more and more of your monthly payment goes towards your principal balance. Now we’re getting somewhere.

Transfer the Balance to a 0% Card

We’ve learned to pay the same amount each month will reduce your balance much faster than just paying the minimum. And, we also know interests also go a long way in determining when your debt-free will arrive. So, imagine the impact of reducing or eliminating the interest charge would have on eliminating debt.

If you qualify, there are many credit card companies happy to transfer your balance at a 0% interest for a limited amount of time – usually 1 to 2 years. Here is how fast you can wipe out debt when interest is no longer applied:

  • Paying $200 a month will take 100 months
  • Paying $400 a month will take 50 months
  • Paying $800 a month will take 25 months
  • Paying $1,000 a month will take 20 months

Not accruing interest allows you to shave months off your path to debt freedom. But what’s the catch?

Just like points and miles, a 0% interest rate is used as a lure. The credit card company hopes you will miss a payment. And, if you do – bam! Your 0% interest rate will turn into a greenback sucking 19% or higher.

Be cautious when moving a credit card balance to a 0% interest rate credit card. Understand the terms for missing a payment as well as how long the 0% introductory rate will last. If you foresee yourself struggling with making payments, keeping a current credit card at a reasonable interest rate may provide more flexibility.

Pay Down $20k in Credit Card Debt

The road to debt freedom is rarely a smooth ride. Managing your credit cards can seem overwhelming. If you find yourself searching for where to begin, know there are services like Christian Debt Counselors out there to help you take the first step. With a little discipline and a lot of hard work, you can reach your goals of becoming debt-free!

Debt Management with a Christian Perspective

Christian Debt Counselors understands that not every situation is the same, which is why we are here to help you choose the right program for you. We pride ourselves on being a faith based organization where confidentiality is key. Call now and find out how we can help.

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Christian Debt Counselors (888) 906-3328
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