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Managing Credit Card Debt

Managing Credit Card Debt

Credit card debt is one of the biggest financial issues for many Americans.  Millions of us carry month-to-month balances on credit cards, and many people have found problems just making minimum payments.  Credit card debt can be a barrier to owning a home, buying a car or even saving towards retirement. Managing credit card debt can be overwhelming, but there are several ways to lower debt or pay them off completely. Here are a few tips for managing your credit card debt and improving your financial picture:


Creating and using a budget is the most basic and important way to manage any debt.  Knowing your monthly income and outgoing expenses can help you move money to where it might be more useful.  For a zero based budget, move any extra funds to your debt.  When moving those funds, some people choose to pay off credit cards with the highest interest rates first, and others choose to pay off cards with the lowest balance in order to see movement in clearing the current debt.  You may also consider creating a “debt snowball.”  In order to create a snowball, once a debt is paid, the amount spent on the debt is rolled over to the next debt to pay.  For example, a monthly payment for a Visa card is $75 each month.  Once that debt is paid, that $75 is added to your monthly payment for the next debt in line and the pattern is continued until there is no debt.

Balance Transfers

If your credit card has a high interest rate, a strategy for reducing the amount you owe over time is to transfer the balance to a lower interest card.  Many credit card companies offer reduced interest rates on balance transfers.  Be cautious with transferring debt as many cards only offer reduced interest rate during short introductory periods.  Often after the introductory period, interest rates can skyrocket, so be sure to read the fine print before moving your debt. Some cards also have annual fees associated with their credit lines.  Before you transfer your card, make sure that any annual fee or other hidden fees will not cancel out the interest savings you might get with the new card.

Debt Consolidation

Personal loans to consolidate debt may be an option to help manage and eliminate credit card debt.  Often consolidation loans have lower interest rates than that offered by credit card companies.  Payments are also fixed and have a set end date.  United Heritage offers low loan interest rates and fixed terms on personal loans.  Because of the fixed terms, a loan can often help reduce the amount of money you’ll pay overall to be debt free.  A UHCU loan specialist can help you decide if a personal loan is the right tool for you.

No matter what path you use to reduce your credit card balance,  remember that it may take time to reduce your debt.  A solid plan with steady attention over time is the best bet to eliminating debt.  A debt reduction plan takes patience, so make sure to track your progress and reevaluate and update your plan regularly to make sure you are on the right path. 

Managing Credit Card Debt
Financial Advice Your Money