Tips for Paying Down Credit Card Debt

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Credit-card-1520400_1920In the United States, the average indebted household credit card debt is $16,140 according to the Federal Reserve, with an additional average mortgage debt of $155,361, and a student loan debt of $31,946.

While it can seem like an overwhelming amount of debt for families, there are steps anyone can use to reduce their credit card debt and free up those funds to help to pay down mortgage and student loan debt.

Effective strategies to pay down credit card debt include:

  • Interest rates – Check the interest rates you are paying on your high debt level credit cards. Pay off those with the highest interest rates first, as this will reduce the overall payments over time.
  • Negotiate rates – You can also call your credit card company if you are current on your payments and if you are making more than the minimum payment to attempt to negotiate a lower rate.
  • Compare rates – If your current credit card company doesn't lower your rates, try comparing different cards and rates. You may be able to transfer the balance and pay off the high-interest rate card with a lower interest rate card. Keep in mind you will be limited in your ability to do this based on your credit score and total debt on your credit report.
  • Consolidating your debt – It may be possible to consolidate your debt into one existing card, but this only makes financial sense if it is a lower interest rate card. Be sure to carefully read the fine print and always make at least the minimum payment on time.
  • Set aside payments – By budgeting for payments and paying at least the minimum per month, you will avoid late fees and interest rate hikes. If at all possible, pay extra on the highest interest rate card and then move to the next to limit the interest you pay.
  • Pay off small balances first – If you have several small balances and one or more large balances, paying off the small balances first can help you put a larger lump sum per month toward the big balances.

Talking to a financial planner is also an important step. These professionals can help develop a working budget to allow you to stay current on all bills while also attacking your credit card debt in a structured and effective way.