5 Easy Tips to Overcome Your Credit Card Debt

Credit card debt has unfortunately become one of the most common financial challenges Americans face today. According to annuity.org, the average American now has a staggering $5,525 in credit card debt as recently as 2021. This makes it the second largest source of debt behind mortgage debt.

Once you fall into the situation where you’re carrying outstanding debt over month to month, it is easy for things to spiral out of control. The situation may feel overwhelming, but there are several effective ways to reduce your debt and get your finances back on track.

1. Create a budget

The first step in fixing debt is figuring out how much you’re making and how much your spending. Once you know your exact financial situation, you can then focus on putting together a plan for what you can afford, and how much you can pay off every month.

If you’re juggling a lot of different sources of ongoing expenses it might seem a little overwhelming to put a budget together, but these days you don’t have to type out a spreadsheet until your eyes glaze over. Nowadays there are plenty of apps that can help you budget with a fraction of the hassle: try Mint, YNAB, Empower, or PocketGuard.

2. Prioritize payments

Once you have a handle on how much money you owe and how much you’re currently spending, you need to prioritize your payments. Of course, the most important payments will be for all your must-haves such as rent, groceries, utility bills, and insurance. After those has been paid, then it is time to decide which expense is the most important to pay down or pay off.

You want to make sure you pay at least the minimum amount due on each of your credit cards to avoid late fees that will not only add to the bill, but also damage your credit score. After that, make sure to focus on paying off the card with the highest interest rate first. If you prioritize from highest interest rate to lowest, you will save yourself the most money in the end and make your payments more bearable month to month.

3. Avoid new debt

This sounds like an obvious piece of advice, and you may already be heeding it or you feel like you can’t avoid it, but it is worth explaining. If you have existing balances on your credit cards that you’re still paying off, avoid using your credit card for future purchases until you pay them off.

Cash, check, or debit card are all great ways to pay for bills that will draw directly from your bank account instead of adding a charge that has to be paid back later and will accumulate interest the longer it takes. Of course, using a credit card is very appealing due to the fact that you can pay for things immediately without waiting for money to be available in your account, and you can also claim rewards just for using the card, but the added interest you will be on the hook for will always be worse than the convenience and rewards you receive.

4. Balance transfer

If you find yourself in the situation where you have multiple credit cards to pay off with high interest rates, the smart move may be to consider a balance transfer. This involves moving the balance on the current credit card you’re trying to pay off to a new card with a lower interest rate.

There are many companies that will offer 0% interest rates as an limited time deal upon joining, which can help you save money by avoiding interest payments and therefore paying off your outstanding debt faster. Before you jump in and transfer your balance, be sure to read the fine print and make sure

5. Talk to an expert

Tips and tricks can be very useful to chipping away at credit card debt, but it is not at all uncommon to be in the situation where you are simply overwhelmed. If this is the case and you don’t feel like you can do it on your own, it may be time to talk to a specialist.

In the case of credit card debt, a credit counseling professional and provide expert advice and support and come up with a comprehensive game plan to get your finances back on track. In addition to just advice, they can also negotiate with creditors on your behalf. This involves fixing errors on your credit statement and reducing interest rates and payments.

Our personal selection for professional credit repair services is Honey Credit Repair. We mentioned them in our credit repair article as well. If you think you can benefit from an expert taking a look at your situation, call Honey Credit Repair at the number below.

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