Kiplinger’s Personal: Getting a Grip on Your Credit Card Debt | business news

Revolving credit, which includes credit cards, rose 21.4% in March, according to the Federal Reserve. But at the same time that credit card debt is growing, rising interest rates have made holding a balance more expensive.

If you have credit card debt, consider these strategies to eliminate or reduce your debt.

Take stock of your debt. If you have balances on multiple credit cards, make a list showing how much you owe on each card, the interest rate, and the minimum monthly payment for each card. A spreadsheet is a handy way to update your progress, but pen and paper work just as well.

If you have good credit, a balance transfer can help you get out of debt.

Many banks offer credit transfer cards for new customers that come with an introductory interest rate of 0% per year for a limited time – between 12 and 21 months, depending on the card. To avoid interest, pay off the balance before the introductory price expires.

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This strategy only works if you resist the temptation to use the credit transfer card for new purchases, says Beverly Harzog, author of “Confessions of a Credit Junkie.” They want to use the card to get out of debt and not add debt, she said.

If your credit score isn’t high enough to meet the criteria for a 0% introductory rate on a balance transfer card, you can qualify for a card with an introductory APR that’s lower than your current card’s rate, Harzog said.

Another option is a debt consolidation loan from a bank or credit union with an interest rate that is lower than the rate you pay on your high-yield credit cards.

Implement payout strategies. If you have balances on multiple credit cards, there are three approaches you can take to address the debt.

The first is the “avalanche” approach. Start with your cards with the highest interest rates and highest balances. Make the minimum payments on the lower-interest cards while using the rest of your available cash on the higher-interest cards.

While the avalanche approach makes the most mathematical sense, some people opt for the “snowball” approach, which works by paying off low-level debt first. Paying off your low-balance cards can give you the motivation you need to pay off all your debt, even if it costs you more in interest.

Finally, there’s the “blizzard” approach, where you start with the snowball and progress to the avalanche. Start by paying off a low balance card so you get a hit and then move on to those with higher rates.

When you cash out your balance, it becomes difficult to save. But try to put enough in an emergency fund to cover three months’ expenses.

Once you’ve paid off your debt, you can increase your savings so you’re prepared for unexpected expenses, reducing the risk of going back into debt.

Emma Patch is a contributing editor at Kiplinger’s Personal Finance magazine. Visit for more information on this and related money topics.

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