6 Ways to Take Control of Credit Card Debt

Tackling credit card debt can feel like an impossible task. And it’s a formidable mountain to climb. The average credit card debt of indebted households—those that aren’t paying their balances off each month—was $9,333 in 2018, according to data from ValuePenguin.

But outstanding credit card debt can hamper your financial success, and it makes it harder for you to save for the future. If you're itching to get out knock your balances down to zero, here are some strategies to get it done:

Get the Full Picture

You can’t tackle your debt until you have a good idea of where you stand. Take this opportunity to list everything you owe on every credit card, including the interest rates you’re paying. Once you have a list of debts and a grand total, you can start to formulate a plan.

Stop Charging to Your Cards

In order to address your credit card debt, you must stop adding to it. Look at your last three months of credit card and bank statements to understand your incoming and outgoing cash flows.

Are you spending more than you’re earning? If so, you’ll need to pinpoint the expenses you can nix or decrease while you’re in pay-off mode. That may mean you don’t order takeout for a while or buy new clothes for a season. Stash your credit cards in a drawer so you can’t use them in a store.

Choose an Approach

There are two common ways to handle debt: debt snowball or debt avalanche. Here’s how they work:

• Debt Snowball: This plan involves making minimum payments on all your credit cards except the one with the smallest balance, toward which you pay as much as possible each month. Once you’ve paid that balance off, you “snowball” the payment money forward to the next-smallest balance, and so on.
• Debt Avalanche: This plan involves making minimum payments on all your credit cards except the one with the highest interest rate, toward which you pay as much as possible each month. Once you’ve paid off that balance, you move to the debt with the next-highest interest rate.

Both approaches are sound. Some experts feel the debt snowball has the advantage of offering early psychological “wins” when you see your balances start to disappear. The debt avalanche, on the other hand, can save you money by shrinking your higher interest rate debt first, but you can lose momentum if that first balance is large. What you choose will depend on your personal preference and situation.

Consider Using a 0% Interest Card

If you have good credit, you may be able to qualify for a credit card offering a 0% introductory interest rate for 12 to 18 months. If that’s possible, you can transfer your higher-interest debt to that card and save on interest charges while you pay your balance down. That said, make sure you can pay the card off before the introductory rate ends, and consider that you’ll usually have to pay a fee to transfer balances to the card.

Take On a Side Gig

There are two ways to aggressively attack debt: Shrink your expenses (so you can pay more toward your balances) or earn more income. Do you work in a field in which you could consult or freelance on the side for extra money? Do you make anything you could sell online? Could you pick up a shift or a task from a gig company? The more you can bring in, the faster your debt will go away.

Set Milestone Goals

Debt payoff can seem like a thankless slog, so give yourself some incentives. Set milestones along the way at which you can reward yourself for paying off your debt to that point. (Every $1,000? Every $5,000?) Don’t make it too lavish—you don’t want to reverse your progress—but make it worthwhile, like a massage or a new pair of shoes or dinner from your favorite restaurant. Small rewards can keep you on track to the finish line.

The crucial step in taking charge of your credit card debt is to get started. The sooner you make a plan and start tackling what you owe, the sooner you'll be making that final payment.