Managing Your Credit Card Debt: A Step-by-Step Guide

Credit card debt has surged among Americans since the onset of COVID-19 in 2020. Many faced sudden job losses, relying on credit cards to cover bills and essentials.

If you’re carrying a balance, it’s common to feel discouraged when reviewing your monthly statement. However, with the right steps, you can take control, reduce your debt, and work toward a debt-free future!

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Understand Your Credit Usage

Credit usage is simply the percentage of your total available credit that has been used. Ideally, this amount should be under 30%. 

How It Impacts Your Credit Score

Carrying a balance each month affects your credit score, especially if your credit utilization is high.

Aim to keep your credit usage below 30% of your credit limit while paying down debt. Staying under this threshold helps reduce negative impacts on your credit score and supports healthier credit over time. 

Speak to a Credit Advisor

Credit Advisors can be an excellent resource for mounting credit card debt.

Often, they will assist in formulating a plan to eliminate high-interest credit card debt and can recommend debt consolidation solutions that are tailored to your specific needs. Many of these services are available at no cost to you.

Examine and Change Spending Habits

Look over your credit card statements and review all of your monthly charges. Do you notice any unnecessary trends, like spending $10 at the coffee shop every morning rather than making coffee at home?

Reducing small expenses and adjusting your spending habits can free up extra monthly funds, allowing you to pay down high-interest credit card debt faster.

The Snowball Method

The Snowball Method is an effective way to pay down debt, one card at a time. Always continue making at least the minimum payment on all cards each month.

1. Focus on the smallest balance first: Pay as much as you can toward this balance each month.

2. Paying off a card: Take the amount you were paying on that card and add it to the payment for the next smallest balance.

3. Repeat: Continue this process until all balances are fully paid.

This method helps build momentum, giving you a sense of progress as each debt is eliminated!

Don’t Carry Your Cards

Once your balances are paid off, put those cards away—but don’t cancel them, as this can harm your credit score. Keeping the cards out of immediate reach can help prevent unnecessary spending.