How to Pay Off Credit Card Debt with Confidence

If you have credit card debt, traversing the debt payoff landscape may feel overwhelming. While the balance may be intimidating, there are simple tips you can enlist to get out from under debt and enjoy a financial life that's free of stress. 

The average American's debt load

Understanding the scope of debt in America can help you put your own financial situation in perspective. According to recent data, the average American carries over $104k in total debt.¹ This includes various forms of debt, with credit card balances, student loans, auto loans, and mortgages being the top categories. Alone, the average credit card debt is nearly $6,500 per household.¹ 

Breaking down these categories, mortgages are often the largest single source of debt, followed by student loans. Mortgages are generally considered “good debt” because they can build equity and have long-term benefits, such as property appreciation and tax advantages. On the other hand, credit card debt, often classified as “bad debt,” tends to be more manageable but can still cause significant financial strain due to high-interest rates and lack of long-term value. By understanding these trends, you can identify areas to focus on as you work toward financial independence. 

The top 3 ways to overcome credit card debt

1. Have a plan

Picture this: You’re trying to get to a destination but don’t have directions. While you may reach the destination eventually, you’ll likely have to spend more time wandering before you do. Tackling debt without a plan can bring similar results. You’ll pay off your credit card balance in time, but it can take longer and potentially even cost more to do so. 

This is because any balance you carry over per payment cycle incurs interest. Left to compound, it’s easy to see how this can snowball into a challenging financial picture. By creating a debt payoff plan, you can determine a manageable amount to save for debt payoff each month, as well as how long it’ll take to get out of the red. Simply knowing when you can expect to get out from under debt is a powerful thing, so don’t skip planning! 

Not sure where you’ll find room in the budget for debt payoff? Use Money Management² to create a budget and pinpoint what categories to cut back in to make room. Or turn to an online debt calculator to quickly crunch the numbers.  

2. Consolidate debt

A balance transfer card allows you to move the balance from a high-interest credit card to one with a lower interest rate. Once approved, your existing credit card balance is transferred over to the new card. This can save you money on interest and make your debt more manageable over time.  

3. Reduce spending 

Discretionary spending includes any purchases that are nonessential. If these purchases are part of what got you into credit card debt, it’s important to address poor spending habits. In doing so, you can help ensure they won’t derail your debt payoff progress. For example, a $500 transfer to a credit card will go much further if you don’t turn around and spend $1,000 the next day on things you didn’t need. 

Review where your money is going and brainstorm luxuries you can live without. For example, you don’t necessarily need to nix eating out. But if you find yourself paying for food delivery multiple times a week, consider opting for pick up instead. Even an extra $20 a week can add up month-to-month, so don’t underestimate the little things! 

Additionally, be mindful of anything that’s feeding bad spending habits. If you’re someone who uses social media, that may include following influencers who encourage you to buy, buy, buy! Deinfluencing your spending habits, which may involve unfollowing accounts, can help you get on better financial footing.  

Moving forward, always check your checking and savings account balances before making a purchase to confirm you can afford them. Set up Online Banking or utilize your financial institution’s mobile banking app to keep account information a few taps away.² 

Don’t let a challenging balance discourage you as you pay off credit card debt. Lean on GECU and our wealth of products and services to succeed. From our low-rate credit cards to tools like Money Management, we have everything you need to get out on top! Not a member yet? You’re eligible if you live, work, or worship in select Ohio, Kentucky, and Indiana counties. Once you confirm eligibility, you can apply for membership online in minutes! We make it quick and easy so you can spend more time enjoying life and building financial confidence.