The more credit card debt you have, the more money you waste on interest charges. In fact, it’s easy to get sucked into a cycle where you rack up a modest amount of credit card fees, only make your minimum payments, and then rack up interest that leaves you with that debt for years to come.
But in fact, there is good news on the credit card front. While total household debt increased by $ 85 billion to $ 14,640 billion in the first quarter of 2021, credit card balances declined by $ 49 billion, according to the Federal Reserve Bank of New York. This is the second largest quarterly decline since 1999. In fact, credit card balances are now $ 157 billion lower than they were at the end of 2019.
Of course, just because credit card balances are generally low doesn’t mean that you have made progress in repaying yours. In fact, you may have increased your credit card balance, especially if your income was affected during the pandemic.
If you still have uncomfortable credit card debt, here are some steps you can take to pay it off.
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1. Reduce your expenses as much as you can
You may already be leading a frugal lifestyle with no wiggle room in your budget to cut spending. But if not, be honest with yourself about your spending habits and at least identify a few small expenses to cut back. This way, you will free up money to pay off your debt.
You may not be able to withdraw as much money from your paychecks as for debt repayment purposes. If so, consider taking a temporary side job, whether that’s working evenings at a local restaurant or driving for a rideshare service. Since this money will not be allocated to existing bills, you can use it to reduce your various credit card balances.
3. Review a balance transfer
If you have a good credit rating, it’s best to consider doing a balance transfer, as it could make your credit card debt cheaper to pay off. With a balance transfer, you transfer your existing credit card balances to a new card with a lower interest rate than you are currently paying. Many balance transfer cards, in fact, come with a 0% introductory interest period that can last for a year or more, so this is an option worth exploring.
4. Consolidate your debt with a personal loan
If a balance transfer isn’t right for you, you might want to consider a personal loan instead. A personal loan allows you to borrow money for any purpose. You can take out a loan for the amount of your credit card debt, pay off your cards, and then pay off that loan at a lower interest rate than your cards charge. The higher your credit score, the lower the interest rate you are likely to get, although there are loans specifically designed for people with fair credit.
It is encouraging to see that nationally, credit card balances are declining. But if you don’t, don’t panic. Instead, take steps to fix your debt problem so that it doesn’t get worse.