Tackle Credit Card Debt
BIG Ideas:
- According to an article published by the Federal Reserve Bank of St. Louis in May of 2024, the average U.S. household with credit card debt has a balance of around $7,226.
- Plan to pay off credit card debt by assessing what you owe, creating a budget, and paying off high-interest debt first.
- Having savings for emergencies and unexpected expenses can help you avoid running up debt in the future.
Got credit card debt? You’re not the only one. Credit card debt in America is on the rise with the average credit card balance at $7,226, according to an article published by the Federal Reserve Bank of St. Louis in May of 2024. For many people, accumulating credit card debt is easy; it’s paying it down that can be challenging, especially with interest rates and minimum payments so high.
To pay off credit card debt, you need commitment, effort, and a good plan of attack. Here’s one to help you:
1. Know what you owe. It may not be a fun exercise to review your debt, but it is super important. For each card, write down your outstanding balance, interest rate, minimum payment amount, and payment due date.
2. Build a budget. That may not seem fun either, but it can help you sleep better at night. To create your budget, track your monthly income and expenses to see how much you have on hand after your bills are paid.
This will tell you how much money you have to pay down your credit cards. Need help with budgeting? Use an app.
3. Slash expenses. If you don’t have extra money in your budget, get out your red pencil and start eliminating expenses.
You’d be surprised how quickly little expenses like subscription services, food deliveries, and morning coffees can add up. Take advantage of apps, such as your banking app, that can help you identify re-occurring charges so that you can cancel any unwanted or forgotten about subscriptions.
4. Up your income. Another surefire way to boost your budget is to increase your income by getting a part-time job or side hustle.
5. Prioritize your debts. Not all debt is created equal. You may, for example, have credit card debt with very high interest rates, some upwards of 20% APR or even higher. Those are the debts you’ll want to focus on first, so use the money in your budget to pay extra.
6. Negotiate with creditors. If you’re having trouble making your payments, don’t be afraid to ask for help. Contact your credit card companies to see if they would consider lowering your interest rate, which would lower your payments. They may even offer a hardship program to help you.
If you’re having a really difficult time, seek professional help from a financial advisor. They may know of programs that can help you consolidate your debt into lower payments.
7. Use your cards wisely. As you pay down your debt, use your credit cards only for emergencies. The last thing you need is to run up more debt.
8. Build savings. Sure, it’s hard to think about saving money when you have debt. It is, however, very likely that not having savings is what created your debt in the first place. As you build your budget, think about setting aside a little money each month for savings.
Stay the course to conquer your date
As you start your debt-busting program, make sure you set clear goals – like dedicating a certain amount of your income each month to paying extra on debt. Track your progress and make adjustments as needed.
For example, if you get a tax return, think about putting that money toward your debt. Also, remember to celebrate your success. Every time you pay down debt, you’re taking a big step forward in your financial life. That’s cause for celebration!
Brazos is here to make borrowing for college affordable
For more than 40 years, Brazos Higher Education has been helping students get the loans they need to build brighter futures. As a non-profit, we can offer you low rates on student loans to help you save money. Contact us today!
