AMERICANS have accumulated $16.5trillion dollars of debt and are – obviously – having a hard time paying it off.
The average credit card debt among consumers is $5,221.
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These went down by only 1.8 percent last year according to a consumer credit review.
As prices continue to rise, more and more people are having to choose between paying debts and buying groceries.
Higher interest rates are also making it harder to pay debts, and more expensive to let them linger.
There are a few things you can do to lower your debt even if you don’t have extra cash.
Matt Schulz, chief credit analyst at LendingTree, spoke with CNBC about some of these tactics.
1. Ask for a lower APR
The annual percentage rate (APR) your credit card company charges can usually be lowered if you just ask.
Credit-reporting company Experian suggests you do this on the account you’ve had the longest.
The issuer may not agree to a permanent reduction, so you can ask to have it lowered for a few months or a year.
If your credit score recently went up make sure to mention it as it can give you a better chance of getting a lower rate.
2. Look for a 0% balance transfer card options
Transferring your balance to a zero percent interest card could let you pay down your debt without paying interest for a year or more.
These introductory offers often come with fees, limits and deadlines, so make sure to read the fine print before applying.
“If you use a 0% balance transfer credit card wisely, it can be a really, really powerful tool against credit card debt,” Schulz said.
3. Look at a personal loan
Although it sounds counterproductive, a low-interest personal loan can help you consolidate your debt.
Since the rate will likely be less than the one you pay for credit cards, you can also save money while paying down debts.
However, personal loans do come with fees, so you’ll have to make sure you’re not spending more money.
4. Check your tax withholdings
Rather than waiting to get your tax return to pay off debts, consider adjusting your tax withholdings.
This will allow you to collect more money from your paychecks rather than waiting to get it back during tax time.
You should make sure any changes you make won’t leave you owing money during tax season.
5. Limit your spending
Obviously, this isn’t an easy thing to do if you’re barely able to pay for essentials.
But if you can, limiting your credit card usage or stopping it completely will stop you from accumulating more debt.
Even if you’re trying to rack up points or cashback rewards, the interest rate will hurt you more than either of those could benefit you.
Improving your credit score
If you have a large pile of debt, it’s likely affected your credit score.
A poor credit rating makes it tougher to borrow, which will affect how you make big purchases like a car or a home.
You may get approved for a loan, but your score could result in a higher interest rate.
Making multiple small but timely payments can slowly boost your score over time.
It doesn’t directly improve your score, but you’re more likely to pay more than the minimum due, which means your balance will drop faster.
You’ll also avoid any late payment fees, which will increase your rating over time.
You can also become an authorized user on someone else’s credit line.
Of course, that person will need a strong financial track record of making timely payments. This could be your parent, relative, or close friend.
And yes, if you miss a payment, or rack up big balances, the primary holder could see negative changes to their credit report.
But nevertheless, as long as you make payments on time, this could be an effective way of boosting your credit score.
In just three months of becoming an authorized user, people have seen their credit scores improve by 11 percent, according to a 2018 study by Credit Sesame.
See if you’re making one of these common credit card mistakes that could be lowering your score.
Plus, see the big change coming to mortgages that will affect millions of homeowners.
