To pay off $40,000 in credit card debt within 36 months, you will need to pay $1,449 per month, assuming an APR of 18%. You would incur $12,154 in interest charges during that time, but you could avoid much of this extra cost and pay off your debt faster by using a 0% APR balance transfer credit card.
The average length of a 0% APR balance transfer intro period is 13 months, according to WalletHub’s Credit Card Landscape Report, and the average balance transfer fee is 3.1% of the transferred amount. Below, you can see how much you could save while paying off $40,000 over different time frames, assuming a 12-month 0% APR period, a 3% balance transfer fee, and an 18% regular APR.
Paying Off $40,000 with a 0% APR Balance Transfer Card
| Months to Payoff | Monthly Payment | Total Interest Paid | Total Savings vs. Regular Card |
| 12 | $3,433 | $0 | $2,836 |
| 24 | $1,799 | $1,979 | $4,809 |
| 36 | $1,287 | $5,143 | $5,811 |
| 48 | $1,040 | $8,726 | $6,606 |
| 60 | $896 | $12,582 | $7,334 |
Of course, these aren’t the only timelines that you could commit to with $40,000 in debt. To price out more options, try WalletHub’s debt payoff calculator. This calculator can also help you decide if transferring the $40,000 in debt to a 0% APR balance transfer credit card would save you money.
Getting a 0% APR credit card isn’t the only way to pay off $40,000 in debt. In fact, there are many options to consider, each suited for slightly different situations.
Ways to Pay Off $40,000 in Credit Card Debt
- 0% APR Credit Card
- Personal Loan
- Debt Settlement
- Debt Management Plan
- Bankruptcy
0% APR Credit Card
0% APR credit cards allow you to avoid interest while paying down your debts. These cards can offer 0% introductory periods on new purchases or balance transfers for up to 21 months.
Keep in mind that you may have to pay a balance transfer fee, which is usually around 3% of the transferred amount. Also, if you decide to transfer your debt to one of these credit cards, do your best to pay it off before the 0% intro period ends and the typically-high regular interest rate kicks in.
Personal Loan
Personal loans can be used to pay off $40,000 in credit card debt, assuming you can qualify for a big enough loan with a lower interest rate than your current credit card interest rate. This depends heavily on your creditworthiness.
Debt Settlement
Debt settlement is when the debtor negotiates with the creditor to pay a lump-sum that covers less than the total amount of the debt. In return, the creditor will forgive part of the debt, as well as other outstanding fees. This option is good for people who have enough money to make a large payment all at once. When taking this route, just be careful not to overextend yourself financially, or you’ll likely just end up back in debt.
Debt Management Plan
Debt management plans allow the cardholder and the lender to amend the original payment agreement by lengthening the repayment term, lowering the interest rate, and perhaps even waiving fees. Each of these modifications is meant to make the repayment process more manageable for the cardholder. Keep in mind, though, that cardholders are still expected to pay the full $40,000 with these plans.
Bankruptcy
Bankruptcy should only be used as a last resort. While declaring bankruptcy may help you clear your debt, it will also damage your credit score for years.
This answer was first published on 02/07/24. For the most current information about a financial product, you should always check and confirm accuracy with the offering financial institution. Editorial and user-generated content is not provided, reviewed or endorsed by any company.
FAQs
There are a number of strategies to pay off large amounts of credit card debt. They include personal loans, 0% APR balance transfer cards, debt settlement, bankruptcy, credit counseling and debt management plans. You may be able to use more than one of these options.
How long does it take to pay off $40,000 debt? ›
It will take 47 months to pay off $40,000 with payments of $1,200 per month, assuming the average credit card APR of around 18%. The time it takes to repay a balance depends on how often you make payments, how big your payments are and what the interest rate charged by the lender is.
What is the absolute best way to pay off credit card debt? ›
With the snowball method, you pay off the card with the smallest balance first. Once you've repaid the balance in full, you take the money you were paying for that debt and use it to help pay down the next smallest balance.
How many people have $50,000 in credit card debt? ›
Running up $50,000 in credit card debt is not impossible. About two million Americans do it every year. Paying off that bill?
How to get out of $40,000 debt fast? ›
Options For Paying Off Substantial Credit Card Debt. There are a number of strategies to pay off large amounts of credit card debt. They include personal loans, 0% APR balance transfer cards, debt settlement, bankruptcy, credit counseling and debt management plans. You may be able to use more than one of these options.
How to wipe credit card debt? ›
Filing for Chapter 7 bankruptcy wipes out unsecured debt such as credit cards, while Chapter 13 bankruptcy lets you restructure debts into a payment plan over 3 to 5 years and may be best if you have assets you want to retain.
Will my credit score go up if I pay off my credit card in full? ›
Paying off your credit card balance every month is one of the factors that can help you improve your scores. Companies use several factors to calculate your credit scores. One factor they look at is how much credit you are using compared to how much you have available.
How to pay off credit card debt when you have no money? ›
Apply for a debt consolidation loan.
Debt consolidation allows you to convert multiple debts, commonly several credit card balances, into a single loan. That can make repayment simpler, and can help you budget since you'll be required to make a fixed payment toward the loan each month.
What happens if someone dies with a lot of credit card debt? ›
When someone dies, their debts are generally paid out of the money or property left in the estate. If the estate can't pay it and there's no one who shared responsibility for the debt, it may go unpaid. Generally, when a person dies, their money and property will go towards repaying their debt.
What amount is considered high credit card debt? ›
Anything over 30% credit utilization will decrease your credit score. So, you can use this as a measure of when you have too much debt. Consolidated Credit offers a free credit card debt worksheet that makes it easy to total up your current balances and total credit limit.
The minimum payment mindset
Here's how most people get trapped in credit card debt: You use your card for a purchase you can't afford or want to defer payment, and then you make only the minimum payment that month. Soon, you are in the habit of using your card to purchase things beyond your budget.
What is the average debt of a US citizen? ›
The average debt an American owes is $104,215 across mortgage loans, home equity lines of credit, auto loans, credit card debt, student loan debt, and other debts like personal loans. Data from Experian breaks down the average debt a consumer holds based on type, age, credit score, and state.
What is the average credit card balance in America? ›
The nation's collective credit-card balance stands at $1.12 trillion, near a record high, the Fed reports. The average card carries an interest rate of 21.6%, an all-time high. The average card balance was $6,360 at the end of 2023, according to TransUnion, another all-time high.
