Debt

How to get out of credit card debt when the rate is 22%

A credit card balance is the most expensive ordinary debt most people carry, and the one with the clearest payoff for fixing. This guide shows what the interest actually costs, in dollars and months, and the order of moves that gets a balance to zero.

Updated October 29, 20268 min readData as of Fed G.19 August 2026; Statistics Canada July 2026

What the rate means in dollars

Credit card interest is charged daily on the balance you carry, so a balance that is not paid in full grows a little every day.³ The Federal Reserve's monthly survey of banks put the average rate on card accounts that were charged interest at 22.36% in August 2026, and the rate across all card accounts at 21.19%.¹ Statistics Canada's figure for outstanding card balances was 21.28% in July 2026.² Americans owed $1,352 billion in revolving credit, which is mostly cards, in August 2026.⁴

Here is what $5,000 at 22.36% costs, depending on how it is paid.

The pattern is steep at the low end. Going from the minimum to a fixed $150 a month cuts the interest by about $5,355. Going from $250 to $400 saves another $569. The first extra dollars matter most.

Step 1: stop the balance growing

Move everyday spending to a debit card or a card you pay in full, so the balance you are attacking only shrinks. If the card has an annual fee, ask whether a no-fee version is available. Check the statement for charges you can cancel; our statement reader finds recurring charges and fees automatically, and our guide on where the money goes shows which lines usually have room.

Step 2: pick an order and automate it

If you have more than one balance, pay the minimum on all of them and put every extra dollar on one.

• Avalanche: extra money goes to the highest interest rate first. This costs the least in total interest, and the difference grows with the size of the balances.
• Snowball: extra money goes to the smallest balance first. It clears accounts faster, which keeps some people going.

The math favours avalanche; behaviour sometimes favours snowball. Either way, set the payments up as automatic transfers the day after payday. A plan that depends on remembering is not a plan.

Step 3: lower the rate if you can

• Ask. Issuers sometimes lower a rate for a customer with a good payment record, especially when told you are considering a transfer.
• Balance transfer. A promotional rate (often 0% for 12 to 21 months in the US; low-rate offers in Canada) for a fee of 3% to 5% of the balance can save far more than the fee at 22%, if the balance is paid during the promotion and no new spending goes on the card. Read what rate applies afterwards.
• Low-rate card. Canadian low-interest cards run about 9% to 13% instead of 20% to 21%, usually with a small annual fee that pays for itself above a few hundred dollars of balance.
• Personal loan or line of credit. A fixed-rate loan at 8% to 12% turns a revolving balance into a fixed schedule. In Canada, unsecured personal lines of credit averaged 8.36% in July 2026.²
• Non-profit credit counselling. A debt management plan can reduce rates with multiple issuers at once. Avoid companies charging large up-front fees for "settlement".

Step 4: build a cushion so it doesn't come back

The Federal Reserve's 2025 survey found that 4 in 10 adults with incomes under $50,000 could not cover a $100 emergency from savings, and 59% of all adults had a major unexpected expense in the past year.⁵ Without a cushion, the next car repair goes back on the card. Even $500 in a separate savings account changes the outcome. Our guide on money habits that last covers how to build it automatically.

Fees that make it worse

• Late fees are added to the balance and then charged interest. Set a minimum-payment autopay as a backstop even while you pay more manually.
• Cash advances carry a higher rate, usually with no grace period and a fee on top.
• Overdraft and NSF fees. A missed card payment pulled from an empty account can trigger both. In Canada, federal regulations cap non-sufficient-funds fees charged by banks at $10.⁶ In the US, the CFPB explains the overdraft choices banks must offer.⁷
• Foreign transaction fees of about 2.5% on purchases in another currency. A no-FX-fee card removes them.

After the balance is gone

Keep the card open if it has no fee: a long account history and low utilization help your credit score. Set the card to pay in full automatically every month, so the balance never carries again. Then redirect the payment you were making into savings. The same $250 a month that cleared the card, invested over decades, is the subject of our guide on long-term returns, and the best places to put it are the tax-advantaged accounts in the US and in Canada.

For context on the wider rate environment: the US federal funds rate averaged 3.75% in September 2026 and the Bank of Canada's policy rate is 2.5%.⁸⁹ Card rates sit far above both, and they fall only slowly when central bank rates do. The fastest way to lower the rate you pay is to owe less.

This guide is general information, not financial, tax, or investment advice. Rules and limits change; check the sources for the current figures before acting.

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