I Have Too Much Credit Card Debt — What Should I Do?

Jen Williamson Updated on April 2, 2019

If you have a bigger credit card balance than you’d like, you’re in good company. The average US household has a credit card balance of about $16,061.

Combine that with student loans—which approximately 44.2 million Americans have—and the picture becomes clear. You, your neighbors, and most of the people you know are probably swimming in debt. So how can you swim out?

Here are a few suggestions for how to pay down your credit card balance while managing other kinds of debt, such as your student loans.

See also: Is it Better to Pay Off Student Loans or Credit Card Debt First?

1. Take stock of the debt you have

If you have many different kinds of loans, figuring out which to prioritize can be a challenge.

Your first step should be to look at all the loans you have, which lenders hold the loans, their standing, and their interest rates. Get a copy of your credit report to make sure you don't miss anything.

If they aren’t already, get all your accounts in good standing by making at least the minimum payment.

See also: Paying Off Student Loans.

2. Make a repayment strategy

In general, credit card debt is one of the worst in terms of your credit score. Plus, interest rates are usually high—the average is 16.14%.

There are several different strategies you could adopt. One of the most straightforward involves picking paying off your highest-interest loan aggressively.

When that’s paid off, switch to the loan with the second-highest rate—and on down the line.

But make sure you maintain minimum payments on your other loans while work on paying down credit debt. Don’t miss a payment on your student loans, for example—that can tank your credit and make you ineligible for some federal benefits.

3. Transfer your balance to a credit card with a lower interest rate

This is a good strategy for people who have a low balance, but who are getting killed on interest rates. The strategy is this: take advantage of a low introductory offer on a new credit card to get your balance paid off quickly—and cheaply.

Look around for a credit card that has a zero-percent interest rate for a set amount of time—most companies have these, and the introductory term is usually about 6 to 12 months. You'll probably be charged a balance-transfer fee (usually around 3%), but this amount will be heartily offset by the money you'll save on interest.

Apply for the card, and once you’re approved, transfer your old balance to the new card. You now have a new loan with zero interest.

Before you stampede out to do this, keep two things in mind. First—this works best if you have good credit. The new lender has to approve you for that shiny low intro rate, and if your credit is bad, they may not.

Second, that intro rate will jump after the term is over—and you could find yourself trapped worse than before.

Do this only for a balance you can pay off quickly. Mark the day the intro rate expires on your calendar—and get that loan paid off before then, no matter what.

4. Consolidate debt with a personal loan

This is a better strategy if you have a large amount of credit card debt that you can’t pay off quickly.

In this instance, don’t transfer your all of your debt to a zero-intro-rate credit card. You won’t get the balance paid off before the introductory rate goes away—and you’ll wind up with a high interest rate again.

Instead, consider taking out a personal loan to wipe out your credit card debt. Check with your bank, local credit unions, or online lenders to find a personal debt consolidation loan. Often, these loans will offer a much lower interest rate than you're paying on your credit cards.

This loan will replace your high-interest credit card debt with an installment loan—which is better for your credit score than a high credit card balance.

Again, this strategy only works if your credit score is good enough to qualify for a lower interest rate. It also works best if you adopt a strict policy about using your credit card, so you don’t build up your credit card debt again.

If you have a large amount of credit card debt, you can get out from under it. Take stock, develop a plan you can stick to, and you should see progress.

If you're looking for other ways to pay off debt faster, consider refinancing your student loans. Are you Refi Ready? Click here to find out.

About the Author
Jen Williamson

Jen Williamson is a freelance writer living in Brooklyn. She has written for a variety of industries, including software, education, business, and personal finance. Prior to that, she worked at an adult literacy nonprofit in Philadelphia, where she coached nontraditional students in passing the GED test and applying for college. When she isn’t writing or reading—which is rare—she can usually be found planning her next travel adventure, training for a marathon, or sneaking in somewhere she’s not supposed to be. Read more by Jen Williamson

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