Consumer Reports: Digging out of credit card debt
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If credit card debt has you feeling stressed, you’re not alone. Many families are struggling to keep up, and it can feel like you’ll never get ahead. But there are ways to take back control. Consumer Reports breaks down simple steps you can take to start paying down your debt and finally get some breathing room.
Americans owe a combined $1.18 trillion in credit card debt, and the average balance per household is around $6,000. With many credit cards with interest rates above 20 percent, it’s tough to make a dent. So, what can you do if you’re struggling to pay down your credit card debt?
Consumer Reports Lisa Gill says, try to pause using your cards and look for ways to cut back on monthly spending. Take any extra money and pay down the debt on the card with the highest interest rate. Doing that helps you save more in the long run by tackling the most expensive debt first.
If your credit score is in good shape, you could move your high-interest balance to a card that offers 0 percent interest for the first year or so. Just try to pay it off before that period ends, or the usual high interest kicks back in.
Try adjusting your payment dates to line up with your payday. It can make staying on top of bills a lot easier. Some credit cards let you pick your due date. And set up automatic payments. That way, at least the minimum gets paid on time, and you avoid late fees.
But if your debt is becoming too much, pick up the phone and call the credit card company and explain your situation. Ask for a lowered interest rate and if they offer a hardship plan. The credit card company may temporarily lower your interest rate, reduce your minimum payment, or waive certain fees, usually for a few months up to a year.
You can also contact a reputable nonprofit credit counseling agency. They may be able to lower your interest rates and consolidate your debt into one manageable monthly payment.
Another helpful step is to review your finances for a few minutes each week. Look to see what’s coming in, what’s going out, and what’s due soon. That way, you can catch issues early and give yourself time to make adjustments before a payment is missed.
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