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The length of time debt relief stays on your credit report depends on the type you use. Most negative items, including debt settlement, stay on your report for up to seven years. But the start time can vary depending on your situation.

What Is Debt Relief?

Debt relief is typically used as another term for settling your debt. That means negotiating with your creditors to lower your outstanding balances and pay them off for a lower amount. This debt payoff strategy is typically reserved for people with large amounts of debt who are struggling with payments and can’t foresee the ability to pay off their balances in the future.

While getting some of your debt wiped out seems like a great plan, there’s a large degree of risk involved, and you’ll also do damage to your credit score.

How Debt Relief Works

There are private companies that offer debt settlement services, but they charge expensive fees and recommend risky strategies while negotiating. Here’s how the process typically works:

•   A debt settlement company may tell you to pause payments on your credit cards. This causes late fees, penalties, and interest to accrue, not to mention major damage to your credit report.

•   In the meantime, you deposit the money you would have paid into a savings account. You may not use your credit cards during this time.

•   The debt settlement company eventually reaches out to your creditors and offers to pay them a settled amount using the funds you saved.

There is no guarantee that your creditors will agree to the settlement. You also have to pay the debt relief company a fee, usually either based on how much you saved or how much you settled. And if you do have any debts discharged, that amount is typically considered taxable income.

Types of Debt Relief Options

There are a few different debt relief options other than debt settlement:

•  Credit counseling: Work with a nonprofit counselor to review your finances and help create a payoff plan for your debt.

•  Debt management plan:” This may be a recommendation from your credit counselor. You pay into a savings account to the counseling organization, who then makes payments to your creditors on your behalf.

•  Bankruptcy: A personal bankruptcy discharges some of your debt, but it requires either a payment plan to creditors for up to five years or selling off your assets to pay your creditors.

How Each Debt Relief Option Affects Your Credit Report

There are multiple categories that affect your credit score, and each debt relief option is likely to cause damage in some way. Here’s what you can expect.

•  Debt settlement: This option can cause major damage to your credit report because payment history is the biggest contributing factor to your score. If you stop making payments, you will continue to accrue separate late payment entries. The debt will also be listed as “settled” on your credit report.

•  Debt management plan: A credit report may indicate any accounts you’ve enrolled in a debt management plan. While that doesn’t directly hurt your credit score, it can be seen by future creditors and may influence their decisions. And if your counselor requires you to close accounts so you don’t charge more, your available credit could drop, hurting your credit card utilization ratio.

•  Bankruptcy: A bankruptcy can cause your credit score to drop by as much as 200 points.

Check your credit score updates frequently as you navigate any type of debt relief.

What’s the Best Debt Relief for Me?

The Federal Trade Commission recommends starting off with strategies you can implement yourself. Making a budget, for instance, can help you track your spending and perhaps make different decisions about where your money goes. Try using a spending app to see what kind of progress you can make.

You can also talk directly to your creditor to create a new payment plan that works for your financial situation, especially if you’re having trouble paying your mortgage.

Debt Settlement vs. Staying Current

There are pros and cons to both options. You’re not guaranteed success with debt settlement, and your credit score could tank if you stop making payments on your accounts. Plus, any amount that is settled is considered taxable income. If you settle a large amount of your debts, that could bump you into a much higher tax bracket.

Staying current with your balances can preserve your credit. But if you’re just making minimum payments, you could see your balance grow as interest continues to accumulate. It’s best to talk to a credit counselor or other financial professional to help you weigh the pros and cons based on your personal situation.

How Long Does Debt Settlement Stay on Your Credit Report?

A debt settlement stays on your credit report for seven years. But your score should start to rebound before then, especially if you take proactive steps to build your credit.

The start date of the seven-year period depends on whether or not you have late payments associated with the account. If there were no late payments when you settled the debt, that settlement date starts the clock on seven years.

But if the account is delinquent or has late payments, the settlement stays on your report from the first late payment in delinquency.

How Debt Settlement Affects Your Credit Score



Debt settlement can hurt your credit score, but it may not cause as much damage as having the account go to collections. However, your accounts will be listed as settled, which is visible to lenders in the future. Although it takes time to improve your credit score after a debt settlement, it can increase before the settlement is removed.

How to Remove Settled Accounts from Your Credit Report

The only way to remove a settled account before the seven-year period is to file a dispute with one of the credit bureaus. This process doesn’t hurt your score, but is only successful if the account has incorrect information listed on your credit report.

How Long Does It Take to Improve Your Credit Score After Debt Settlement?

It depends on many factors, including how you handle your other finances in the months and years following a debt settlement. Proactively taking steps to rebuild your credit can help expedite the process.

How to Improve Your Credit After Settling Debt

Here are some strategies to help increase your credit score after debt settlement.

•   Check your credit report regularly for accuracy. You can get a copy of your report for free once a week from each of the three major credit bureaus. Visit AnnualCreditReport.com to get started.

•   Pay your bills on time.

•   Get a credit card.

•   Pay down any remaining high-interest debt.

Credit Score Tips

Knowledge is power when it comes to managing your credit. Check your credit score without paying to know where you’re starting from immediately after your debt settlement is finalized. Then use a credit score monitoring app to get personalized advice on what tactics to take.

The Takeaway

Any type of debt relief will have some impact on your credit score and financial future. Weigh the benefits and drawbacks of each option to choose the right next step. No matter what you decide to do, regularly checking your credit reports is a smart way to better understand your overall financial health.

Take control of your finances with SoFi. With our financial insights and credit score monitoring tools, you can view all of your accounts in one convenient dashboard. From there, you can see your various balances, spending breakdowns, and credit score. Plus you can easily set up budgets and discover valuable financial insights — all at no cost.

FAQ

Does debt relief ruin credit?

It depends on the type of debt relief you choose. Debt settlement will be listed on your credit report for seven years, but your score could start to rebound before then.

How long does it take to rebuild credit after debt relief program?

There’s no exact timeline for rebuilding credit after a debt relief program. Expect it to take up to two years to start seeing a noticeable difference. Using a credit monitoring service can help you track exactly how much progress you’re making.

Can debt settlement be removed from a credit report?

Debt settlement can be taken off a credit report only if the information is inaccurate. Otherwise, it will take seven years before the settled debt drops off your credit report.

Photo Credit: iStock/Jelena Danilovic
SoFi Relay offers users the ability to connect both SoFi accounts and external accounts using Plaid, Inc.’s service. When you use the service to connect an account, you authorize SoFi to obtain account information from any external accounts as set forth in SoFi’s Terms of Use. Based on your consent SoFi will also automatically provide some financial data received from the credit bureau for your visibility, without the need of you connecting additional accounts. SoFi assumes no responsibility for the timeliness, accuracy, deletion, non-delivery or failure to store any user data, loss of user data, communications, or personalization settings. You shall confirm the accuracy of Plaid data through sources independent of SoFi. The credit score is a VantageScore® based on TransUnion® (the “Processing Agent”) data.

*Terms and conditions apply. This offer is only available to new SoFi users without existing SoFi accounts. It is non-transferable. One offer per person. To receive the rewards points offer, you must successfully complete setting up Credit Score Monitoring. Rewards points may only be redeemed towards active SoFi accounts, such as your SoFi Checking or Savings account, subject to program terms that may be found here: SoFi Member Rewards Terms and Conditions. SoFi reserves the right to modify or discontinue this offer at any time without notice.

Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .

Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

SORL-Q324-029

Agreeing to cosign a loan for someone is a generous thing to do, and risky. Such a noble deed will show up on your credit report, but the impact won’t always be positive. On the one hand, your credit score might improve if the primary borrower executes timely payments. On the other hand, if the primary borrower reneges on their financial responsibility, your credit score could take a huge hit.

But there’s more to it than that, so let’s examine what you should consider before cosigning a loan, whether for a friend, family member, or business associate.

What Does It Mean to Cosign a Loan for Someone?

Cosigning a loan means that you agree to be responsible for the debt if the borrower does not or cannot repay the loan. You are not the primary borrower, but you could become the primary payer. You can cosign any type of loan — a personal loan, auto loan, mortgage, home improvement loan, or student loan. You can also cosign a lease or make someone an authorized user of your own credit card, which may have a similar effect on your own financial situation.

Why Would a Loan Need a Cosigner?

Typically, a loan requires a cosigner if the primary borrower cannot qualify to borrow the funds on their own. The reason could be that their credit score is too low, they haven’t built up a credit history, or they don’t have a sufficient or steady income. If any of these apply, a lender will consider them to be at high risk of default and choose not to qualify them for a loan.

How Does Being a Cosigner Affect My Credit Score?

Although you are not the primary borrower when you cosign a loan, your credit score could be impacted. Depending on how good a job the primary borrower does at tracking their money, budgeting, and making payments, cosigning a loan could either boost your score or damage it. Therefore, it’s important to understand how cosigning will affect it.

Risks of Cosigning a Loan

There are serious financial and personal consequences to cosigning on a loan. The biggest risk: Cosigners assume legal responsibility for the debt. If the primary borrower defaults, the cosigner may have to pay the full amount of what’s owed.

If you cosign a loan, it will impact your debt-to-income (DTI) ratio, which is an important factor lenders consider if you apply for a loan. Your ratio may go up if you cosign a loan, making you appear more risky as a borrower, and limiting your ability to obtain credit in the future.
Cosigning may also impact your credit utilization ratio (how much of an allowed line of credit you have used), which is an important factor in computing your credit score.

But there are other potential impacts:

•  If a lender conducts a hard inquiry (a type of credit check) on your credit report as part of the loan application process, this may cause a temporary drop in your score, particularly if you apply for other loans or credit cards within a short period.

•  If a payment is over 30 days past due, the creditor might report the late payment to the credit bureaus, lowering your credit score.

•  If a cosigned vehicle is repossessed, your credit may suffer even if you do not use the vehicle.

•  If the account is sent to collections, your credit score will drop.
The relationship you have with the primary borrower also could be damaged if they fail to meet their end of the deal.

The relationship you have with the primary borrower also could be damaged if they fail to meet their end of the deal.

When Cosigning May Improve Your Credit

Your payment history, credit utilization ratio, and credit mix are three factors used to calculate your credit score, and these could all be impacted when you cosign a loan. Cosigning can positively affect your credit score when a primary borrower makes timely payments and pays back the loan according to the terms.

•   On-time payments by the primary borrower can have a positive impact on your credit score because they add to your payment history.

•   If the loan is paid off according to the terms, this can show that you use credit responsibly.

•   The new debt may add to your credit mix. Successfully managing a mix of debt, such as credit cards and installment loans, can boost your credit score. Maybe you don’t have an installment loan. If you cosign on a well-managed installment loan, such as an auto loan, it indicates to lenders that you are a responsible borrower.

Recommended: Why Did My Credit Score Drop After a Dispute?

Pros and Cons of Cosigning a Loan

The pros and cons of cosigning a loan depend on the situation.

When Should I Become a Cosigner on a Loan?

The decision to become a cosigner on a loan is a personal one, and it depends on the circumstances of everyone involved. You might want to cosign a loan to help someone achieve their financial goals. Perhaps your son or daughter needs you to cosign on a loan for a car, or someone you want to help needs you to cosign on a personal loan to start a business. It’s up to you to understand the risks involved and to assess the borrower’s ability to honor the payments.

Does being a cosigner show up on your credit report? Yes. So it is not a decision to be taken lightly. Before you agree to cosign on someone else’s loan, it would be wise to check your own credit score to make sure it is healthy. If you decide to cosign, implementing a free credit score monitoring app can help you track the impact on your score.

What Are the Responsibilities of a Cosigner?

The cosigner on a loan is legally bound to pay the debt if the primary borrower defaults. The cosigner is just as responsible for the loan as the primary borrower, even though they may not directly benefit from the loan. This is the case even if the primary borrower files for bankruptcy. If you used assets as collateral to help the primary borrower secure the loan, the lender can sell them to recoup the debt.

It is the cosigner’s responsibility to discuss with the primary borrower their ability to manage their budgeting and spending, pay back the loan in a timely manner, and plan what to do if they find themselves unable to meet their financial obligations.

The Difference Between an Authorized User and a Cosigner

Authorized user is a designation used for credit cards. Cosigners aren’t typically accepted for credit cards. Instead, a person can be designated as an authorized user of another person’s credit card. The credit card owner is the person responsible for the debt, and they give permission for the authorized user to also receive a card and use the account.

Here are the main differences between a cosigner and a credit card-authorized user.

What to Consider Before Cosigning a Loan

You will have your own reasons for cosigning a loan. However, here are some things you might want to consider before you take on the risk of another person’s debt.

The Consequences for You

Consider the consequences for your credit score and ability to borrow in the future. If your debt-to-income ratio goes up, your ability to get financing may be reduced.

If you have to assume the payments, creditors can sue you and garnish your wages or bank accounts to collect the outstanding debt. Your credit score updates periodically but the negative impact can persist for up to seven years.

Your Relationship with the Primary Borrower

If the primary borrower benefiting from your generosity manages the payments responsibly, it could strengthen your relationship with that person, However, the opposite could happen if they do not manage the debt well.

How to Monitor the Loan

If you do go ahead and cosign the loan, it’s a good idea to monitor whether the primary borrow is making the payments on time. You might be able to intervene if a problem occurs before the debt is sent to a collection agency. The Federal Trade Commission (FTC) recommends asking the lender or creditor to notify you if the borrower falls behind on their debt. You’ll also want to add the loan to your own personal debt summary so you remember to keep track of it as time passes.

Recommended: How to Check Your Credit Score Without Paying

The Takeaway

Cosigning on a loan can be a way to help another person access credit. However, cosigning a loan can also ruin a relationship and your finances if the primary borrower fails to hold up their end of the bargain.

Before cosigning on a loan, understand what the consequences could be for your credit standing, financial situation, and your relationship. If you decide to go ahead, be clear about the expectations and get an agreement in writing. An agreement won’t absolve you of the responsibility to pay the debt, but it might help in getting the primary borrower to pay you back at a later date when they may be in a better financial situation.

Take control of your finances with SoFi. With our financial insights and credit score monitoring tools, you can view all of your accounts in one convenient dashboard. From there, you can see your various balances, spending breakdowns, and credit score. Plus you can easily set up budgets and discover valuable financial insights — all at no cost.

FAQ

Will my credit score go up if I have a cosigner?

Your credit score could go up if you have a cosigner, because if you are approved for a loan with a cosigner and you make timely payments, it will add positively to your credit history, which will also favorably impact your credit score. Having that cosigned loan could also improve your credit mix, another plus where your credit score is concerned.

Is cosigning bad for your credit?

It can be. If the primary borrower does not make payments on time or if they default on the loan, it will negatively affect your credit. It could also be bad for your credit if your credit utilization ratio increases. However, cosigning for a loan could also be good for your credit if payments are made on time and/or your credit mix improves.

Who gets the credit on a cosigned loan?

Both the primary borrower and cosigner are impacted by the cosigned loan. A cosigned loan typically appears on both credit reports, and the cosigner is responsible for paying back the loan if the primary borrower fails to do so.

Photo Credit: iStock/flzkes
SoFi Relay offers users the ability to connect both SoFi accounts and external accounts using Plaid, Inc.’s service. When you use the service to connect an account, you authorize SoFi to obtain account information from any external accounts as set forth in SoFi’s Terms of Use. Based on your consent SoFi will also automatically provide some financial data received from the credit bureau for your visibility, without the need of you connecting additional accounts. SoFi assumes no responsibility for the timeliness, accuracy, deletion, non-delivery or failure to store any user data, loss of user data, communications, or personalization settings. You shall confirm the accuracy of Plaid data through sources independent of SoFi. The credit score is a VantageScore® based on TransUnion® (the “Processing Agent”) data.

*Terms and conditions apply. This offer is only available to new SoFi users without existing SoFi accounts. It is non-transferable. One offer per person. To receive the rewards points offer, you must successfully complete setting up Credit Score Monitoring. Rewards points may only be redeemed towards active SoFi accounts, such as your SoFi Checking or Savings account, subject to program terms that may be found here: SoFi Member Rewards Terms and Conditions. SoFi reserves the right to modify or discontinue this offer at any time without notice.

Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

SORL-Q324-026

No matter how well you plan and budget for an overseas trip, you may still end up with some extra foreign cash at the end of your vacation. And since you can’t spend that currency back home in the United States, you’ll need to come up with an alternative plan for all those foreign coins and bills now burning a hole in your pocket.

Sure, those bills may be pretty (have you seen the Australian dollar?), but it won’t do you any good hanging as art on the wall. And you don’t want to miss out on having that money to save or spend at home.

Instead of letting it go to waste, here are a few things you might do with that leftover foreign change once your trip is done and your regular life sets in again.

What to Do with Extra Foreign Currency

Using It to Pay Part of Your Hotel Bill on Vacation

There’s nothing quite so annoying as arriving at your gate with five minutes until boarding, only to realize you’ve still got about $80 worth of Moroccan dirham or Turkish lira left in your wallet.

One way to avoid this scenario is to try and use your foreign cash to cover costs while you’re still abroad. A helpful tip is to switch to cash spending near the end of your trip. Then, if you have leftover currency on your last day, see if you can use it to cover some of your hotel bill. Sometimes hotels will let you split your bill up, so that you can pay some of it in cash and put the rest on a credit card. Just be sure to leave some currency in your wallet for your cab ride to the airport and tips.

Shopping Duty Free

If you have a fair chunk of foreign currency leftover, consider making a stop at the Duty Free stores upon departure. This can be a good strategy if you are buying something you’d use ordinarily, like your favorite perfume or liquor, or if you’re still looking to buy a souvenir from the destination.

However, some countries, especially those that are sensitive to inflation, don’t accept foreign currency (except for euros and dollars) at Duty Free, so double-check that your change is eligible before you show up at the register with a cart full of goods.

Recommended: 27 Tips for Finding the Top Travel Deals

Donating to Charity

Thanks to UNICEF’s Change For Good initiative , you may not have to exchange a dime. This program involves a partnership with several international airlines to help passengers donate their excess change.

On these flights, passengers receive envelopes in which they can donate their leftover foreign currency. If you’re not flying with a partner airline and still want to donate, you can mail your change to the organization.

Some airports have similar initiatives and programs that raise money for different charities around the world — all you need to do is find the box or envelope and stuff it full of your extra change. It’s a great way to do good and not let that spare money go to waste.

Exchanging It

Although exchanging physical money comes with a fee, this can be one way to recoup your cash if you aren’t planning on visiting the country again anytime soon.

In a pinch, you can exchange foreign currency at the airport (abroad or at home), but you likely won’t get the best exchange rate. A better option is to visit your U.S. bank to see if they will exchange your foreign cash (or, if possible, deposit it directly into your account). Banks typically offer better rates than the exchange kiosks you find in airports.

If you used a currency exchange service to exchange your U.S dollars into a foreign currency, see if they offer a “buyback” program. Some services allow you to sell back your unused foreign currency for a better rate or lower fees than you can get elsewhere.

Recommended: Ways to Be a Frugal Traveler

Saving It for Another Time

If you know you’ll be visiting again, why not store your extra foreign currency with your passport? Not only will you be able to keep the money, but you’ll save yourself a trip to the ATM upon arrival at your destination.

This can be one of the easiest solutions to the “what to do with leftover foreign coins” problem. And it might encourage you to start planning your return visit and growing your travel fund.

Gifting It

If you’re wondering what to do with foreign coins, know that they can be a fun gift to a child or currency collector in your life. It can be an opportunity to teach kids about both the world at large and about money. Bonus points if they are from a country with a cool design on their currency — like the Egyptian pound with pharaoh Tutankhamun.

Any leftover foreign coins or bills can also be a thoughtful gift for friends or family members who are traveling to the same spot. This can make an especially nice wedding gift for friends heading out on a honeymoon.

Recommended: Can You Use Your Credit Card Internationally?

The Takeaway

If you wind up with excess foreign currency at the end of a trip, you have a few options. You might save it for later, donate it to a charity, exchange it, or gift it to a friend. Depending on how much money you have, when (if at all) you plan on returning to your destination, and how much you’re willing to pay in fees, there’s an option that will likely be the right choice for you.

FAQ

Where can I donate leftover foreign currency?

UNICEF’s Change for Good program accepts donations on a number of international airlines. Leftover change may also be mailed to this program. You may also see other opportunities to donate currency at airports, benefiting various charities, as well.

Can I exchange my foreign currency at a bank?

If you’re looking to exchange foreign coins and bills, it’s worth visiting or calling your bank. Many banks offer to exchange currency for their clients. However, some will only do so for a limited number of currencies. A fee is usually involved, but it is likely to be lower than what you will pay at an airport currency exchange kiosk.

What is the meaning of leftover currency?

Leftover currency is typically foreign money that you have at the end of a trip. Before or after you return home, you can exchange it to U.S. dollars. Other options include saving it for a future trip, donating it, or gifting it.

Is leftover currency legitimate?

Leftover currency is legal tender in the country you have traveled to, but when you return home, it will not be usable. Therefore, it may be wise to exchange it or donate it.

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SOBNK-Q324-100

Credit card debt can go from zero to thousands with one quick swipe. Or it can build slowly like rising water — a nice dinner here, some retail therapy there. Before you know it, your balance is uncomfortably high. You’re not alone. Almost half of American households carry credit card debt. Of those consumers, the average balance is $6,501, according to recent Experian® data.

If you’ve vowed to pay off your credit card balance, you’re making a smart financial move. Doing so can save you money on interest, build your credit history, and help you achieve other financial goals. Here, learn the top tips and strategies for getting it done, from the snowball strategy to hardship plans to the boring but effective debt-focused budget.

What Is a Realistic Payoff Schedule?

If you’ve been carrying a balance on one or more cards, it may take longer than you’d like to pay off the debt. Determine how long you need to become debt-free while still covering your monthly bills comfortably. 

You’ll want to consider these facts:

•   A longer payoff term can allow you to continue to save and invest while paying down debt. 

•   A shorter payoff term can save you a considerable amount in interest.

Worth noting before moving on to tactics: If there’s no scenario in which you can cover your living expenses and pay off your credit card debt in five years, the standard payoff strategies may not be enough. It may be time to consider applying for credit card debt forgiveness.

7 Credit Card Payoff Strategies and Tips

There are numerous ways to tackle debt and pay off credit cards. The approaches below may work best when you mix and match several to create your own custom debt payoff plan.

1. Create a Debt-Focused Budget

Achieving financial goals usually starts with a budget. Making a budget is designed to help you discover extra cash you can put toward your credit card bill.

•   First, make a list of your monthly bills that reflect the “musts” of your life. Along with your rent or mortgage, phone, gas, food, and other required living expenses, include your credit card payment and other minimum debt expenditures. You can leave the amount blank for now. This is your “Needs” column.

•   Next, look at your “wants.” These are things that you can survive without — restaurant meals, new clothes, gym membership, travel — but that often make life better. Which items can you do without temporarily so you can put their cost toward your credit card bill? The idea is to trim spending so you can pay down your debt.

It’s OK if your budget isn’t the same from month to month — flexibility is good. While you’re at it, build the following into your budget:

•   Look ahead for unavoidable big purchases (that upcoming destination wedding) and occasional bills (annual home insurance premiums, for instance, or holiday gift shopping). 

•   Leave some wiggle room for unexpected expenses. You might need to dip into your emergency savings for this kind of cost, but it’s good to have a cushion in your budget (say, for a rent increase).

•   Recognize that your credit card payment may be lower some months to accommodate the fluctuating costs noted above. Just always pay at least the minimum payment.

Your new budget should prioritize your credit card payment on par with other bills and above nonessential treats. One way to make budgeting easier on yourself is to download a financial insights app, which pulls all of your financial information into one place.

2. Zero-Interest Credit Card

The frustrating thing about credit cards is how interest can take up more and more of your balance. Zero-interest credit cards, also known as 0% APR cards, allow card holders to make payments with no interest on transfers and purchases for a set period of time. The promotional period on a new credit card can usually last from 12 to 21 billing cycles, long enough to make a large dent in the card’s principal balance.

Consolidating your credit card debt on one zero interest card serves to simplify your monthly bills while also saving you money on interest payments. The key here, of course, is to avoid racking up even more credit card debt.

One drawback to these cards is that you often need a FICO® Score of 670 or above to qualify. And once the promo period expires, the interest rate can climb to 29% or higher. In an ideal world, you’ll want to achieve your payoff goal before the rate rises.

A credit card interest calculator can give you an idea of how much your current interest rate affects your total balance.

3. The Snowball, the Avalanche, and the Snowflake

The snowball and avalanche debt repayment strategies take slightly different approaches to paying down debt. Both involve maintaining the minimum payment on all but one card.

•   The debt snowball method focuses on the debt with the lowest balance first, regardless of interest rate, putting extra toward that payment each month until it’s paid off.

Then, that entire monthly payment is added to the next payment — on top of the minimum you were already paying. Rinse and repeat with the next card. It’s easy to see how this method can quickly get the snowball rolling.

•   The debt avalanche is based on the same philosophy but targets the highest-interest payment first. Getting out from under the highest debt can save a lot of money in the long run. Just like the snowball method, applying that entire payment to the next highest interest debt can lead to quick results.

•   The third snow-related strategy, the debt snowflake, emphasizes putting every extra scrap of cash toward debt repayment. If you have extra money to throw at your debt, even $20, that can still make a difference in your overall amount owed. So this method encourages you to chip away at debt with any small amounts available.

4. Make More Money

Sure, increasing your income is easier said than done. But if you have the time to spare, it can make paying down debt a whole lot easier. Here are the top ways that people can bring in more cash:

•   Start a side hustle (or monetize an existing hobby)

•   Get a part-time job (on top of your current job). Two shifts a week can help you bring in another $500 to $1,000 per month.

•   Sell your stuff. Reselling clothes, books, old electronics, and jewelry can help bring in cash.

•   Negotiate a raise. In some cases, labor shortages may give workers extra leverage to ask for more.

5. Negotiate with Your Credit Card Company

If your large credit card balance is the result of unemployment, medical bills (yours or a loved one’s), or another financial setback, inform your credit card company. You may be able to negotiate a lower interest rate, lower fees and penalties, or a fixed payment schedule.

Hardship plans have no direct effect on your credit rating. However, the credit card company may send a note to the credit bureaus informing them that you’re participating in the program. 

One point to be aware of: Your credit card issuer may also close or suspend your credit card while you’re paying off the balance. This can leave you without a means to pay for purchases and could also ding your credit score.

6. Change Your Spending Habits

Changing how you spend your money is key to paying down debt — and to avoid racking up more in the future. You can approach this in two ways: as a temporary measure while you pay off your cards or a permanent downsizing of your lifestyle.

•   The advantage of the temporary approach is that people are generally more willing to give things up when it’s for a limited time. For instance, can you suspend your gym membership during the warmer months when you can work out outdoors? Perhaps you can challenge yourself to cook at home for 30 days to save on restaurants. Or you might go without paid streaming services for six months.

String enough of those small sacrifices together to cover a year or two, and see how quickly you might be able to increase your credit card payments. That in turn can make your payoff term shrink.

•   Downsizing your lifestyle for the long term has its own appeal, even for people who aren’t paying down debt. Living below your means is key to accumulating wealth. How exactly you accomplish that isn’t important. For instance, you can frequent cheaper restaurants, reduce the number of times you go out each month, or merely avoid ordering alcohol and dessert. The bottom line is to save money, avoid debt, and enjoy the financial freedom that results.

7. Personal Loan

Similar to a zero-interest credit card, a personal loan is a form of debt consolidation. Personal loans tend to have lower interest rates than credit cards, saving you money. And if you’re carrying a balance on multiple credit cards, a personal loan can allow you to simplify your debt with one fixed monthly payment.

Personal loans can be a great option for people with good to excellent credit. That’s because your interest rate is determined largely by your credit score and history. You can typically borrow between $1,000 and $100,000, and use the money for just about any purpose, from paying off debt to funding travel or a home renovation.

You will usually find fixed-rate personal loans, though some variable-rate ones are available as well. Terms usually run from two to seven years for personal loans.

The Takeaway

Credit card debt can sneak up on you. If you’re carrying a balance on one or more cards, there are numerous ways to approach paying down your debt. You might start with a new budget that prioritizes your credit card payment along with your other monthly bills, and trim your spending accordingly. You could then combine a broad payoff strategy (the snowball, the avalanche) with other tips and tactics (zero-interest credit cards) to minimize your interest payments and shorten your payoff term. And remember: You’re not alone, and you can do this!

Think twice before turning to high-interest credit cards. Consider a SoFi personal loan instead. SoFi offers competitive fixed rates and same-day funding. See your rate in minutes.

FAQ

How to pay off a huge credit card bill?

There are a variety of ways to pay off a large credit card bill. These include making (and sticking to) a budget, trying the debt avalanche or snowball method, applying for a zero-interest balance transfer card, or taking out a personal loan.

How to get rid of $30,000 credit card debt?

To pay off a $30,000 credit card debt, it’s wise to create a smart budget, look into cutting your expenses, develop a repayment plan, and see about consolidating your debt. If these don’t seem likely to lead to getting rid of your debt, you might talk to a certified credit counselor and/or consider a debt management plan.

What is the best tip to pay off credit cards?

The best tip for paying off credit card debt will depend on a variety of factors, such as how much debt you have vs. your available funds. For some people, the debt avalanche method of putting as much available cash toward the highest interest debt can be a smart move. For others, consolidating debt with a personal loan may be a good option.

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SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

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If you, like many people, cringe when it’s time to pay the check after dinner out with friends, there are solutions. It can get tedious and frustrating to try to figure out who had how many drinks, but dividing it evenly may not be fair to the person who just had an appetizer. Or you might find that there’s often one person (or more) who doesn’t have cash, making payment tricky. 

To avoid ending a fun evening by doing a lot of math or risking hurt feelings, try these strategies. Splitting the check can be easily wrangled with just a little advance planning.

6 Tips for Splitting the Bill With Friends

These tactics can help you split the bill and keep everyone happy. The next time you go out to dinner as a group, try one.

1. Pick a Place Where You Order at a Counter

You could go to a fast-casual restaurant that allows you to order at the counter on separate tabs and then enjoy your meal together at the table. If you’re on a tight budget and are trying to save money or you’ve had difficulty splitting checks with friends in the past, this allows you to avoid a sticky situation. Or you might have a local food hall where each guest can grab their own meal from a multitude of stalls and then dine together. 

As these styles of dining continue to grow in popularity, you and your friends can have your choice of cuisines — without blowing your budget or haggling over the bill.

2. Ask for Separate Checks — Before You Order

Having everyone in your party get their own separate check is another simple solution. The key is to ask your server for separate checks before you start ordering. That way, your server can track everyone’s order separately from the get-go. This can help you avoid the confusing chore of splitting the bill (“Who had the cappuccino?” etc.) after the meal has ended.

Still, be mindful of the extra work you’re asking your server to do. Some experts recommend limiting the number of separate checks you request to no more than four. Some restaurants may honor a request for more or less; you might ask and see.

Recommended: How to Manage Your Money: Tips to Do It Right

3. Have One Person Put the Bill on Credit

Another strategy for splitting the bill is to agree that one person will pay the bill with their credit card, and the rest of the group will reimburse them. This makes things easier for the server. Be sure to include the tax and tip in your calculations so that everyone pays their fair share.

Instead of cash, since most people don’t carry as much money around as they used to, you could use an app to transfer money from one friend to another. Or you can likely move funds from your checking account to the bill payer’s using tools your bank offers.

There can actually be perks to being the person who pays the bill. You might earn rewards when you charge the amount or you might qualify for other bonus offers. 

4. Use an App to Track Your Outings

There are a few apps, like Splitwise and Tab, that allow you to track and split purchases with friends. These bill-splitting apps divide the cost of the bill and assign each person what they owe. 

A number of these apps connect to payment platforms so that everyone can pay their share or transfer money to others in the group. If not, you might then designate one person to pay the bill, as described above, and then others pay them back.

In addition, many payment apps, including PayPal and Venmo, have bill splitting features that can help a group split a bill evenly or with custom amounts. And some apps allow a group to split a bill and pay their share from their bank account. 

Recommended: Guide to Mobile Wallets: What They Are and How They Work

5. Use Different Credit Cards to Pay

If you forgot to request separate checks at the start of the meal, you still have options for dividing the check. Confirm that the restaurant will take the number of credit cards you wish to pay with, then have everyone go through and tally up what they ordered.  Then ask for those amounts to be charged to the appropriate card card.

For instance, one person might say, “Can you please put $38 on this card?” and another would say, “Can you put the remaining $50 on mine?” Then you would each pay your bill, adding any tip you wish to leave.

Just be forewarned: Many restaurants will only want to split a bill two or three ways with this method. If there are eight of you out for the night, this is unlikely to be a good option. 

6. Split the Bill Evenly

Say there are three of you dining out and the bill comes to $120. You might not get into the details of which person had the two pricey mocktails vs. the others each having a single glass of wine. If each person just puts in $40 (plus tip), you’ve split the bill evenly and politely.

This concept works especially well when you’re ordering small plates, which are designed to be shared. After all, when you’re sharing all the food, even bill-splitting makes sense.

If there are certain dishes you’re not going to eat, you might want to speak up at the beginning of the meal and ask if it’s possible for you to get a separate check.

Recommended: 10 Personal Finance Basics

Splitting the Bill Etiquette

Here are a few tips to ensure that things stay polite when you split the bill.

Ask for a Separate Check ASAP

As noted above, if you’re watching your spending, mention upfront your interest in a separate check. You might tell your group that’s your plan or simply request a separate check from your server when they start taking the order. However you approach it, it can spare you bad feelings later or having your bank account take a major hit by getting stuck splitting a big bill evenly.

Don’t Splash Out if You’re Splitting the Bill Evenly

Be mindful of what you order if you are splitting the bill evenly. If everyone else is ordering $15 hamburgers and you order the $32 steak special, that’s not fair to others when the tab is divvied up. If you’ve got to have that steak, ask for separate checks, or else perhaps volunteer to pay the tip on the entire tab to compensate.

Share the Meal Appropriately

If you are splitting the bill evenly, keep an eye out to make sure everyone gets their share of the meal. For instance, just because the guacamole and chips were placed on the table next to one person, that doesn’t mean you can’t politely say, “Please pass that to our end of the table once you’ve had some.”

Try Not to Worry About Every Last Penny

Recognize that splitting bills can be less than precise. There’s a chance you may pay a couple of dollars more or less than the exact amount you owe. Sometimes, simplicity is the best path rather than getting into advanced math calculations which might yield a couple more dollars in your savings account but trigger bad feelings. It may be best not to contest amounts down to the last penny for the sake of preserving the good vibes.

The Takeaway

There are several ways to split a bill when dining out with friends. Some methods are to request separate checks, to eat at a restaurant where you order at a counter, or to have one person pay and then the others reimburse their share. These tactics can allow you to keep everything polite among your group while enjoying good food and good company. 

Consider opening a bank account that makes it easy to send money and split a bill. 

Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with eligible direct deposit, you’ll get a competitive annual percentage yield (APY), pay zero account fees, and enjoy an array of rewards, such as access to the Allpoint Network of 55,000+ fee-free ATMs globally. Qualifying accounts can even access their paycheck up to two days early.

FAQ

How do you politely split a bill?

How to split a bill politely can be accomplished in a variety of ways. You might request separate checks if your group is on the small side, or you might divide the bill evenly. Another option is for one person to pay the bill, and others pay them back. Or you could dine at a restaurant where you order at a counter or at a food hall. In these settings, each person can pay their own way and then eat with their group.

Is there a polite way to ask to split a bill?

A polite way to split the bill is to bring it up before you and the other diners begin ordering. That can simplify matters. You might say something like, “Before we order, does anyone have any ideas for splitting the bill?” or “I am just going to have an appetizer tonight, so I will ask for a separate check.”

How do you divide a bill?

There are usually two methods for dividing a bill. You can divide the bill evenly among all guests, so that each person pays the same amount, regardless of what they ordered. Or you can divide the bill so that each person only pays for their share, whether they ordered three courses or just had dessert. The latter, as you might guess, involves more math. As you decide on a method of splitting the bill, don’t forget to account for tax and tip.

SoFi Checking and Savings is offered through SoFi Bank, N.A. Member FDIC. The SoFi® Bank Debit Mastercard® is issued by SoFi Bank, N.A., pursuant to license by Mastercard International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.

Annual percentage yield (APY) is variable and subject to change at any time. Rates are current as of 12/23/25. There is no minimum balance requirement. Fees may reduce earnings. Additional rates and information can be found at https://www.sofi.com/legal/banking-rate-sheet

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Although we do our best to recognize all Eligible Direct Deposits, a small number of employers, payroll providers, benefits providers, or government agencies do not designate payments as direct deposit. To ensure you're earning the APY for account holders with Eligible Direct Deposit, we encourage you to check your APY Details page the day after your Eligible Direct Deposit posts to your SoFi account. If your APY is not showing as the APY for account holders with Eligible Direct Deposit, contact us at 855-456-7634 with the details of your Eligible Direct Deposit. As long as SoFi Bank can validate those details, you will start earning the APY for account holders with Eligible Direct Deposit from the date you contact SoFi for the next 31 calendar days. You will also be eligible for the APY for account holders with Eligible Direct Deposit on future Eligible Direct Deposits, as long as SoFi Bank can validate them.

Deposits that are not from an employer, payroll, or benefits provider or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, Wise, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Eligible Direct Deposit activity. There is no minimum Eligible Direct Deposit amount required to qualify for the stated interest rate. SoFi Bank shall, in its sole discretion, assess each account holder's Eligible Direct Deposit activity to determine the applicability of rates and may request additional documentation for verification of eligibility.

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*Awards or rankings from NerdWallet are not indicative of future success or results. This award and its ratings are independently determined and awarded by their respective publications.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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