Budgeting Managing Your Debt 4 Frustrating Reasons Your Credit Card Balance Is Not Going Down By LaToya Irby LaToya Irby LaToya Irby is a credit expert who has been covering credit and debt management for The Balance for more than a dozen years. She's been quoted in USA Today, The Chicago Tribune, and the Associated Press, and her work has been cited in several books. learn about our editorial policies Updated on September 29, 2021 Reviewed by Khadija Khartit Reviewed by Khadija Khartit Khadija Khartit is a strategy, investment, and funding expert, and an educator of fintech and strategic finance in top universities. She has been an investor, entrepreneur, and advisor for more than 25 years. She is a FINRA Series 7, 63, and 66 license holder. learn about our financial review board Fact checked by Hans Jasperson Fact checked by Hans Jasperson Hans Jasperson has over a decade of experience in public policy research, with an emphasis on workforce development, education, and economic justice. His research has been shared with members of the U.S. Congress, federal agencies, and policymakers in several states. learn about our editorial policies Photo: JGI / Jamie Grill / Blend Images / Getty Images You are faithfully making your monthly payments on your credit cards and other debts each month, but it seems like your balances aren’t budging. Feeling like you're not making progress on paying off your account can make you feel like giving up. Understanding how credit card payments are applied to your account can help you understand why your balance isn't going down and help you change your payments so that your account actually goes down. Your Payments Barely Cover Interest Interest the main cost of borrowing money. Each of your monthly debt payments covers a certain amount of interest and a certain amount of principle. If more of your payment is going toward interest, your balance will only inch down a small amount each month. For example, if your credit card balance is $1,000 and your interest rate is 18%, your finance charge will be about $15. With a payment of $30, your balance will only go down to $985, not $970, as you might expect, because $15 of your payment was applied to the finance charge. Check a recent copy of a billing statement to see how much of your last payment was applied to interest versus reducing your balance. There are two ways to combat this problem. First, you can increase your payment amount, so that more money goes toward reducing your balance. Sometimes paying extra on your loan will advance your next due date instead of reducing the balance so make sure to indicate (on your payment coupon) that the extra payment should be applied to principle. Getting a lower interest rate is another option, but not one that's as easy to execute. With credit cards, this means either asking your credit card issuer for a lower rate or transferring the balance to a low-interest rate credit card. With loans, the only way to get a lower interest rate is to refinance into another loan with a lower interest rate. Your credit history must be good enough to qualify for a lower rate. Refinancing isn't free; weigh the costs before making a move. Your Payments Are Going Towards Fees Fees affect your debt payoff in a similar way to interest – they keep your balance from going down even though you’re making payments. Eliminate fees by first understanding what fees you’re being charged. Then you can avoid the actions that trigger fees. Late fees can be avoided by making your payment on time each month. Schedule online payments for a few days before your due date, so you have time to react if something goes wrong. If your credit card issuer still charges a fee for exceeding your credit limit, you can avoid the fee by paying your balance below the limit and checking your available credit before spending. You may be able to get your annual fee waived by asking, but if not, this may be the card you want to pay off first. Transactional fees—like a cash advance or balance transfer fees—can be avoided by avoiding the transactions that cause the fees. Cash advances are particularly expensive because they begin accruing interest immediately. You’re Still Creating Debt If you’re still making credit card purchases or taking out loans, your overall debt balance won’t go down by much, if it goes down at all. To see more progress with your payments, you have to stop creating new debt. That means, no more credit card purchases. Move any recurring subscription payments to your debit card, so these payments come from your checking account and don’t offset your credit card payments. You’re Only Paying the Minimum To make more significant progress on your debt, you need to pay more than the minimum. One strategy you can use to pay your debt is to pick debt to pay off quickly and pay a lump sum toward that debt while paying just the minimum on all your other debts. Order the debts by interest rate and start from the one with the highest interest rate then go down the list. Then, once you’ve paid off the first debt, apply the same payment strategy to the next debt and the next until they’re all repaid. Was this page helpful? Thanks for your feedback! Tell us why! Other Submit