A man sitting at his desk on the phone looking at his card.

Clever Ways to Better Manage Credit Card Debt


You can’t get out of paying the balances you owe on your credit cards, but you can use these clever strategies to make your credit card debt less costly. Eventually, it will be a thing of the past.

Having credit card debt can feel stressful, overwhelming and frustrating. Aside from the fact that credit card debt may mean you’re still paying for items you purchased months (or years) ago—plus the cost of any interest you may be paying on your credit card balance—lingering credit card debt can hijack the rest of your financial life. Depending on how much you owe, debt may mean you don’t have much cash to spare once you've paid for all your bills, which makes it hard to save the money you need to work toward other financial goals.

You can’t get out of paying the balances you owe on your credit cards, but you can use these clever strategies to make your credit card debt less costly. Eventually, it will be a thing of the past.

Try to negotiate a better interest rate on your credit card

If you have good credit and a history of paying your bills on time, your credit card issuer may be willing to offer you a lower rate—but only if you ask! While one poll by CreditCards.com suggests few people attempt to negotiate a lower interest rate with their card issuer, eight out of ten people who asked for a lower rate got one.

To support your request, gather lower rate offers you may have received in the mail from other credit card issuers. This shows the card issuer that their competitor is willing to win your business, and provides an example of the type of rate they may strive to match.

Consider the impact that a simple request could have on your debt, based on this example from the nonprofit group TakeChargeAmerica: A person with $5,000 in credit card debt with a fixed interest rate of 18%, will pay more than $2,900 in interest until the debt is paid off, if she only pays the minimum payment due each month. But if that interest rate was lowered to 13% (and all factors stayed the same), that person would pay about $1,100 less in interest charges.

Consider balance transfers

Transferring a credit card balance from a higher interest rate card to a lower rate one may require that you pay a fee—but it could be worth the cost if there’s a significant difference between your current interest rate and the balance transfer card’s interest rate. Before you transfer a balance, do your research to find a competitive offer, like a card with a 0% interest rate that's guaranteed for at least 15 months, and no annual fee. Once you do transfer the balance, try not to use the card for new purchases. Focus on paying as much of the debt down as possible before the introductory rate expires, so you put a dent in your debt, instead of just moving money from one card to another.

Look into other types of lower-cost loans

If you have good credit, a personal loan may offer a lower interest rate than your credit card, while allowing you to use the loan money to pay your highest interest credit card debts. (You’ll still need to make monthly payments on the personal loan, over a scheduled period of time, but the interest rate should be lower than your credit card).

Shop around for personal loans based on the amount of money you need to borrow to pay off your highest interest credit card balances, how long you ’ll need to repay the money you borrow on the personal loan and any fees that may be required to apply for, or, secure the loan. If you have money set aside in a savings, CD or investment account, some personal loans may allow you to use those assets as collateral to secure the loan. This may allow you to borrow the money you need to pay down your credit card debt at a lower interest rate, while you to continue to grow your other assets.

If you own a home and have equity in it, a home equity loan or line of credit (HELOC) you may consider using your home as collateral to borrow a lump sum of money at a fixed interest rate (a home equity loan), or a variable interest rate line of credit (HELOC) to pay off higher interest credit card debt.

Focus on the balance with the highest interest rate

The snowball method and the avalanche method are two common debt payoff strategies. Like knowing you’re eliminating a debt entirely—even if it’s only a small amount? Try the snowball method to tackle your smallest debt first, and work your way up to the bigger balances. Want to make your debt less expensive, right away? Start with the highest interest rate debt. Known as the avalanche method, this tackles your most expensive debt first, so you’re paying less money on interest rate charges each month.

Eliminating your credit card debt takes some time, patience and discipline, but you don't have to feel held back by debt forever. Try these strategies to make your credit card debt more manageable, and less expensive. As you pay down your debt over time, you'll find that you can focus less on the decisions in your financial past, and more on building your financial future.

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