Paying it off isn’t particularly easy, either. The median American household earns $67,521 a year, and after paying the rent or mortgage, covering the utilities, and buying food, there’s not a lot left over. That extra credit card bill has a huge impact on someone’s finances. With that in mind, here are six tactics to help you tackle your credit card debt: [This article was first published on The Simple Dollar in 2020. It was updated in March 2022.] Stop using your credit cards for a year. Instead, aim to live solely using your debit card and cash that you have. Why do this? It will absolutely force you to live within your means. You’ll learn how to deal with small financial emergencies without just relying on a credit card. Avoiding credit cards ensures that your credit card balances will only decrease – as long as you are not adding to the balance. Also: The best crypto credit cards Simply call the issuer of each of your cards and ask about an interest rate reduction and, if you have some balance free, the availability of zero interest balance transfers. Your goal is to lower your interest rates on all of your cards as much as you can, reducing the amount you’re paying each month in pure interest. It’s also a good idea to look into potentially getting a new credit card with a 0% interest balance transfer offer available. This doesn’t mean that you start using credit cards for purchases; you’re doing this to reduce interest rates. If you get such a balance transfer card, move your highest-interest balance to that offer. Also: The best credit card for good credit Then, figure out how much you can devote in total each month to eliminating those cards. It needs to be higher than the total minimum payment on all of your cards. You can always add more to it during months when you have some extra money to accelerate debt repayment, but you want a firm amount devoted to this. This will help you budget around it and automate payments if you wish. Each month, make the minimum payment on each of those credit cards, then make the largest extra payment you can on the card with the highest interest rate. When you pay off that highest interest card, cross it off your list and keep going with the next one. Don’t reduce the amount you have committed each month to debt repayment. Instead, each month, simply make a bigger extra payment to your card with the highest interest rate. That extra payment will grow over time, and your repayment speed will increase. For this, try tackling your closets and shelves and overstuffed cabinets with a good decluttering strategy, like the KonMari method. Simply go through the contents of each of those spaces and ask yourself which items really spark joy for you and which ones do not. If an item doesn’t excite you in any way or isn’t an essential tool, sell it. Instead of assuming the worst, look for spending habits that have little impact on you and change those. Take your electric bill, for example. Try to do little things around the house that consume less energy in ways that are invisible to you, like using LED light bulbs and a programmable thermostat. Also: The best Capital One business credit card Go through old credit card statements and ask yourself which expenses still seem worth it to you. Aim to only completely cut out on the ones that no longer seem worthwhile. Those changes alone will result in substantial savings with minimal life impact. Instead, focus on smaller, sustainable changes. Try out some strategies from the previous tip and stick with the ones that seem like you could do them for the rest of your life. If the changes rub you the wrong way, drop them without a second thought; they wouldn’t last anyway, and there would likely be a spending spree backlash if you forced yourself to stick with them until you reached the breaking point. It’s those smaller, sustainable changes that will make it easy to stick with the plan, get your cards paid off, and then move on to even bigger financial goals.
