Credit Card Debt is at an All-Time High: 10 Ways to Dig Out of Debt Faster

Credit card debt is like a bomb exploding in your financial life. It can wreck your credit score and cause major damage to your savings and retirement funds.

Credit debt is at an all-time high, with total credit card debt in the U.S. reaching a new record of $986 billion by the end of 2022, according to the Federal Reserve Bank of New York.

If you are deeply in the red, take heart. There are many ways to dig out of credit card debt and put your finances back in the black.

We compiled a few simple steps you can take now to get your credit card debt under control.

Many credit card companies offer promotional periods where you are charged a 0% annual percentage rate (APR) on debt. These promotions might last for six months or even longer.

Transferring debt to a card that offers such a deal can buy you time as you pay off the debt. Temporarily eliminating interest charges means you can reach the goal of paying off debt faster.

Be aware that a 0% APR card may come with stipulations that could get you into deeper debt. For example, a 0% APR card may charge large late fees or switch to a higher-than-average interest rate once the promotional period ends.

Transferring a balance to this type of card typically makes sense for those who are confident they can pay off most or all of their debt during the promotional period.

One of the best ways to pay off credit card debt is to increase the number of monthly payments you make on the card.

Consider cutting unnecessary spending and putting the savings toward extra monthly payments on your credit card. The extra payments should allow you to pay off debt much faster.

There are plenty of part-time jobs or side hustles you can take on for a few hours each week. Use the extra money you earn to get out of debt trouble.

Think about potential side hustles, like tutoring students. Or turn a hobby, such as making jewelry or woodworking, into a new way to earn cash.

Many experts recommend you choose one of two methods when paying off debt. Choose the method that works best for you.

The “avalanche” method asks you to make extra payments on the debt with the highest interest rate until you pay it off. Then you find the debt with the next-highest interest rate and tackle it and repeat until all your debts are gone.

The “snowball” method has you make extra payments on the debt with the smallest dollar amount and pay it off quickly before moving on to the next-smallest debt, and so on.

People who want to save the most money in interest costs generally choose the avalanche method. Those who find motivation in quickly paying off debt often prefer the snowball method.

One big help in getting rid of debt is to track what you spend month after month. This lets you see exactly where your money is going. Some expenses may be necessary, but other expenses on your credit card are probably not.

If you see that you spend a good deal of money on eating out, for example, make changes. Start packing a lunch for work or invite friends over for dinner instead of going out. These small changes can make a big impact on eliminating debt from your life.

It sounds easier than it is, but try to commit to refusing to accumulate additional debt in the future.

If you see something you want, stop and ask whether you really want to grow your debt pile. Pause before you reach for your card or press the “Buy Now” button on an online retailer’s site.

That little hesitation before you make an impulse purchase might convince you to skip the purchase and add up to real savings.

Consider debt consolidation, particularly if your debt is spread out over multiple cards with different interest rates.

To consolidate their debt, people take out single personal loans to pay off credit cards and get the balances down to zero. However, look before you leap into this solution.

A personal loan may have a lower interest rate than your credit card, but it’s still a loan that you will have to pay back. Plus, it might come with fees and other costs.

Also, it makes little sense to consolidate your debt unless you're committed to avoiding adding new debts to your financial picture in the future.

Put your skills to work by talking to creditors about waiving fees or renegotiating your debt.

For example, your credit card company might be willing to negotiate on the interest rate attached to your debt. A lower interest rate will save you money, and you can use those savings toward the debt.

If your debt is too overwhelming to handle on your own, consider meeting with a credit counselor who can help you navigate your debt.

A credit counselor can advise you on the best ways to tackle your credit card debt and get it under control. They also may be able to customize a plan based on your circumstances and needs.

It can be so easy to simply pull out a credit card whenever you need to pay for something. but it can be hazardous to your financial health.

Instead, get in the habit of carrying cash and using it for more purchases. The amount of cash you have at any given time will limit the amount you’re able to spend, and you won’t add to your credit card debt.

Taking control of your credit card debt will help you build up your credit score and grow your bank account.

If you’re struggling financially, create a budget to help you identify places where you’re spending too much money. Even small cuts can add up to big savings you can use to get out of debt.