This February, the Federal Reserve Bank of New York reported that American credit card debt hit an all-time high of almost $1 trillion at the end of 2022. More than $60 billion of that amount was added in 2022’s fourth quarter alone — which makes sense, especially given that last year’s holiday season marked the end of a year with the worst inflation rates in decades.
If your own credit card debt makes up a percentage of the total amount of American debt, you’re definitely not alone. Even though it can feel overwhelming to get out of debt, you’re not on your own there either: Keep reading for 11 steps you can take now to get your credit card debt under control.
Start tracking your expenses
The first step to getting rid of debt is to stop adding more to what you already have. The easiest way to do that? Figure out what you spend money on and cut back on nonessentials.
Start by tracking your daily expenses and breaking them down by category: How much do you spend on food? How much on housing and utilities?
Once you know where your money goes, you can draw up a budget that allocates a certain amount to each category, including debt repayments. Doing so should help you get a handle on spending, so your debt doesn’t go up.
Know your interest rate
Credit card interest rates can vary depending (in part because of your credit score), with some rates reaching 20% or more. What’s worse: Some Americans who carry credit card debt from month to month don’t know their card’s APR.
If you fall into that category, hit pause on reading this article and check your credit card statement ASAP to figure out what your interest rate is. Once you know your rate, you can decide on your next course of action.
Consider transferring your balance to a better card
If you checked your interest rate and found that it’s at or above 23%, consider transferring the balance to a card with a better rate. The less interest your current debt accrues, the more money you’ll save.
Plus, some cards offer new customers perks like 0% APR for a year or more, which gives you time to pay off the debt without accruing more interest.
Turn your current card off
Whether you end up transferring your balance or not, it might be wise to set your card to inactive for now. You can still make regular payments (and, crucially, interest will continue to accrue on the current debt), but you won’t be able to charge anything to the card itself.
Aim to exceed your minimum monthly payments
The faster you pay off your debt, the less interest you’ll accrue, which means the less money you’ll have to spend to get out of debt.
Credit card companies know this, and they’re interested in maximizing their own profits — which means the typical monthly minimum payment is only a hair above the interest you accumulated that month. If you stick to that minimum payment, you’ll be in debt far longer than if you paid off the debt faster.
If the minimum payment is all you can afford, don’t feel bad about sticking to it
While paying a card off faster is better for your wallet in the long term, it’s not always feasible.
If finances are tight this month and meeting your monthly minimum is a stretch, just focus on making that minimum payment. You’ll still be putting money down toward paying off your debt, and you’ll be spared the extra expense of late fees.
Add another source of income
Maybe you keep adding to your credit card debt because you don’t have enough money in your bank account to cover essential expenses, or perhaps you want some extra money that you can use only for paying off your credit card debt. Either way, it could be helpful to look for a side gig that helps you get ahead financially.
Obviously, picking up a second job is easier said than done. But even if you don’t have much time to invest in another job, gig economy staples like Uber driving or DoorDashing can take as much or as little time as you can spare. Every dollar you earn is another dollar you can put toward meeting — and eventually exceeding — your minimum payment amounts.
Consider paying off your smallest debt first
Do you carry a balance on more than one credit card? While you should keep making minimum payments on all of your cards, you might want to prioritize paying off one debt before the others.
If you use the snowball method of paying off debt, you’ll prioritize paying off the smallest debt first: After making all of your minimum payments on every debt you owe, put any extra cash toward the smallest debt to pay it down fastest.
Consider paying off your debt with the highest interest rate first
Alternatively, you can use the avalanche method of debt payment. After you make minimum payments on every debt, put any extra money toward the debt with the highest interest rate.
Compared to the snowball method, the avalanche method might save you more money in the long run (depending on how quickly you can pay off your highest-interest debt). However, both strategies are valid: It’s up to you to decide which one works best for you.
Use your tax refund strategically
If you’re lucky enough to get a solid tax refund this year, consider putting it toward paying off your debt. While it could be tempting to spend that cash on a fun vacation or a big purchase, putting at least some of the money toward your credit card debt moves you a step closer to becoming debt free.
Leave your cards at home when you go shopping, debit card included
Having a hard time committing to your budget? Consider withdrawing a set amount of cash to use on your next shopping trip and leaving your plastic cards at home. You’ll have to stick to spending that amount only — there’s no chance of you overdrawing your debit card or adding more debt to your credit card.
Contact your credit card company
Your interest rate and repayment terms aren’t necessarily set in stone. You’re always welcome to directly contact your credit card company and try to negotiate different terms at a better rate.
You’ll have a better chance of winning over your credit card company if you do your research: Know your current APR compared to the average APR, outline better offers advertised by other companies, and try calling again later if the customer service rep you chat with doesn’t bite.
Talk to a credit counselor
The Financial Counseling Agency of America (FCAA) is a non-profit organization made up of financial counselors, including credit or debt counselors who can help you structure a solid debt repayment plan.
Getting help from the FCAA doesn’t cost anything, though you should make sure to thoroughly research the agency you’re paired with. You can also find trusted financial counselors on the official Consumer Financial Protection Bureau website.
Reevaluate your recurring payments
Recurring bill payments can be a great way to save money by avoiding late fees, but not if you’re being automatically charged for services you don’t use. Take a look at your most recent bank statement to find out which services you’re paying for each month, then cancel any subscriptions you aren’t actually using.
You'd be surprised how little things like that can literally add up and help you move beyond living paycheck to paycheck.
Understand your relationship to credit cards
Some people can open a credit card, pay off the balance each month, and take advantage of great rewards like cash back or travel benefits without overspending. Others struggle to stop spending money they don’t have and end up with a mountain of debt.
Neither group of people is better than the other, but if you fall into the latter category, credit cards just might not be for you — and that’s okay.
The state of credit card debt in America has never been quite so dire, but that doesn’t mean solutions are out of reach — neither for the nation generally nor you individually.
If you’re struggling to cope with debt, then it's time to focus on eliminating some money stress. These suggestions can help you reclaim your own sense of financial control and restore the peace of mind that comes with living debt-free.