A significant amount of high-interest credit card debt is one of the few things that can be more stressful and distressing financially.
Millions of Americans, from all economic brackets, have significant credit card debt with extremely high interest rates. The average annual percentage rate for cards issued by commercial banks at the end of last year was 16.45%, and rates charged by shop credit cards can be far higher.
Despite a sharp decline from a record of $927 billion at the end of 2019, card balances were still high at $841 billion at the end of the first quarter and may rise further.
“Credit card debt is still a big issue,” said Rachel Gittleman, manager of the Consumer Federation of America’s financial services outreach program. “There were some pay-downs at the beginning of the pandemic, but I think balances may start to rise again with the increases in the cost of living.”
There are methods to assist you lower the amount you owe and/or reduce the amount of interest you pay on the debt if you are having trouble making the minimum payments on your credit card bills.

However, there is no magic solution to heavy debt. The first step in the answer is altering your own behavior.
“The only long-term solution is to fix your spending habits,” stated Summer Red, senior education manager at the Association for Financial Counseling and Planning Education and a financial counselor. “Nothing will be successful unless you stick to a reduced spending plan.”
“You must get your spending below your income level.”
You pay $167 per month to keep a $10,000 credit card amount with a 20% interest rate from growing, but it merely prevents your balance from increasing. You’ll need to do more effort in order to start paying down the loan balance.
Get control of your spending by avoiding credit card use and creating a long-term budget that includes paying off credit card balances.
Red advises individuals to destroy all of their credit cards except for one on the first front. If you still struggle with the need to use your card, put it in the freezer rather than canceling the accounts because doing so will harm your credit score. “It takes about three hours for a credit card to thaw and be ready to use,” said Red. “That gives you time to think about your purchases. ”Use the card just for purchases that you can pay off in full at the end of the month.
You will need to make some compromises on the second front in order to start paying down debt. It can entail selling a car, downsizing a home or apartment, or preparing more meals at home. You must create a budget that breaks down all of your income and costs to find areas where you may cut back on spending and make debt payments.
Gittleman advises seeking assistance. “Every consumer’s financial situation is different,” she said. “They have different debts, different spending habits and different things of value to them.”
“Working with a certified financial counselor can help you figure out your best options.”
There are two main debt repayment models when it comes to strategies. The first approach, known as the snowball method, gives consumers some momentum by paying off the smaller debt sums first. To prevent late fines or increased interest rates, the goal is to pay the minimum amounts due on all debt balances first, and then apply the remaining funds to your smallest debt balance.
You go on to the next smaller balance once you have paid off that one. “The motivation of paying off a debt is very valuable,” said Red. “Being able to see that can be a powerful incentive for people.”
You can begin by concentrating on the debt with the highest interest rate if you don’t require the reinforcement. The so-called avalanche strategy, which works from highest rate to lowest, will result in long-term interest cost savings for you.
There are other measures you may take that may lower the amount you owe or decrease the interest you’re charged, but the only thing that will consistently get you out of a financial hole is changing your spending habits. These are four options to think about:

- Make a call to your credit card company to see if you can negotiate a lower balance or interest rate. Don’t begin by mentioning the idea of filing for bankruptcy; instead, state that you are unable to make your current payment under the circumstances that are in place. In order to ensure that they get paid, credit card companies may provide some assistance.
- Although they aren’t free, credit card balance transfers to other cards that provide a temporary interest-free period may make sense. They might provide 0% interest for six or twelve months, but they usually demand 3% to 4% of the total amount up front. You won’t be much better off if you don’t pay off the debt during that grace period.
- Your interest costs can be significantly reduced by consolidating your high interest credit card debt and paying it off with a lower rate personal loan. If your credit is bad, it will probably have to be a home equity loan. The drawback is that if you don’t manage your expenditures, your home may eventually be in danger.
- Bankruptcy may be your best option if your debts are simply too high—often due to medical bills, which play a significant role in 60% of personal bankruptcies. Bankruptcy might help you start over if the majority of your debt is unsecured, such as credit card balances and medical costs. Before doing this, consult with a bankruptcy attorney and financial counselor.