Expert tips to pay off your credit card debt, including specific methods to become debt free
LOS ANGELES (KABC) -- More Americans are racking up credit card bills and falling behind on payments. Here are some expert tips to get those balances paid down, including specific methods to get you on the road to being debt free.
A recent report from Nerdwallet found that Americans owe a total of $1.21 trillion in credit card debt.
"So this year we found that credit card debt is up 16% compared to a year ago, and that's not the only form of borrowing that costs more...mortgages, student loans and auto loans are also up, which is putting a lot of people in a very tough situation when it comes to being able to repay those loans," said Sara Rathner with Nerdwallet.
Rathner says the first step to paying down debt is to make a list of all the amounts you owe and the interest rate for each debt. Then make a debt payoff plan.
"And that idea is to keep you motivated and organized while you make debt payments," she said.
One popular method is "debt avalanche," where you prioritize the debt with the highest interest rate first, then move to the debt with the next highest interest rate on your list.
Or you could try a "debt snowball," where you focus on the debt with the lowest balance and keep moving your way up to higher balances.
Rathner says you can also try to lower the interest rates on your cards.
"Start by calling the number on the back of your credit card and talk to somebody in customer service and see if you'd be eligible for a lower credit card interest rate," she said.
You can also look into balance transfer credit cards.
"You typically have to pay a small fee. It's 3% to 5% of the transferred balance, so it's something to budget for. But if what you can stand to save on interest is higher than that fee, it does become worth it," she said.
And if you're struggling to make just minimum monthly payments, Rathner says there's help available.
"Look for a nonprofit credit counseling service. They can help you with your budgeting, with debt negotiations, and with other actions you can take to help make your debt a little bit more manageable," she said.
Join us every weekday morning on Eyewitness News at 5 a.m. for our new segment, ABC7 On Your Side. John Gregory has you covered on money-saving tips, including tricks to save on your bills, smart negotiating tactics, plus where you can score free stuff!
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