Ways to get your credit card debt paid off

Financial advisor Clark Howard is offering strategies to help consumers eliminate credit card debt, advocating for methods like the ‘snowball’ and ‘avalanche’ alongside advice from non-profit credit counseling agencies. These approaches aim to empower individuals to take control of their finances and pay down what they owe.

Tara Alderete, a credit counselor with Money Management International, emphasizes reaching out for help early to manage debt that feels overwhelming.

Take action immediately

Cash back, travel rewards and points cards can offer benefits, but these advantages are quickly negated when monthly balances are not paid in full. The accumulating interest can easily outweigh any rewards earned, defeating the original purpose of using a credit card.

Howard stresses the importance of immediately taking action to stop accumulating new debt.

Clark Howard advises people struggling with credit card debt to physically separate themselves from their cards.

“The 1st thing I want you to do is literally put your credit cards in the deep freeze,” Howard said. “I got a freezer bag here, and I’m going to fill it with water, for real. And then they go in the freezer where they stay until you’ve paid every last penny you owe.”

Revert to older payment methods

He also suggests reverting to older payment methods like cash or debit cards, though he cautions about card skimmers and monitoring bank accounts when using a debit card.

Assess all debts

Howard recommends a thorough assessment of all debts.

“Now pull out a pen and paper,” Howard said. “I want you to write it all down, not to overwhelm you, but to empower you so you can take charge.”

To begin this process, individuals should gather all their credit card statements. They should then list the total amount owed for each card and its corresponding interest rate.

“Snowball” or “Avalanche” repayment methods

Howard then recommends two specific strategies for debt repayment.

“I want you to attack that debt by using the ‘snowball’ or ‘avalanche’ method,” Howard said.

The ‘snowball’ method involves paying off the card with the smallest balance first while making only minimum payments on other cards. Eliminating a smaller debt can provide motivation to continue paying off the remaining balances. Conversely, the ‘avalanche’ method prioritizes paying down the card with the highest interest rate.

“But my favorite is the avalanche, because you’ll pay the least amount totally, and the lowest amount of interest,” Howard said, suggesting that as much money as possible should be directed towards this card, with minimum payments made on all others.

Help is available

For those finding the debt repayment process overwhelming, help is available. Tara Alderete, a credit counselor with Money Management International, a non-profit credit counseling agency, advises early intervention. “

I think the best thing to do is reach out as early as possible and say, hey, this is getting a little bit out of control. How can I get some help?” Alderete said.

Money Management International can typically assist consumers in reducing their interest rates, sometimes bringing them down to single digits or even to zero percent. This reduction allows individuals to pay off their debt more quickly.

Clark Howard emphasized that getting out of debt often requires sacrifices. However, he promises that the feeling of being debt-free brings an immense sense of relief.

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