How to Get Out Of Credit Card Debt

With inflation chipping away at our spending power, many of us have been leaning more heavily on our credit cards during the past year. Credit card balances reached an all-time high of $986 billion at the end of 2022, and the average debt that we carry on our cards climbed up to $5,805 per person. Interest rates on credit cards have also been on the rise, so keeping debt on our cards is now costing us more money than it has in decades.

Once you’re pulled into a cycle of debt, it can be hard to find your way out — especially if you weren’t taught how to use credit cards to your advantage. Research shows some 43% of people who have credit card debt don’t know what interest rate they’re being charged, and 65% believe carrying a small balance on your card each month actually improves your credit score (it doesn’t!).

Sometimes, the best place to start is with the basics. What are the rules of thumb for building credit? What can we do to get a hold on debt that’s growing out of control? And how can we use credit cards as part of a healthy, disciplined budget?

Jennifer Streaks, senior personal finance reporter and a spokesperson for Insider, joins us to tackle all these questions and more. Jennifer has covered personal finance and business for CNBC, Forbes, and Black Enterprise Magazine, and she’s also the author of “Thrive! Affordably: Your Month to Month Guide to Living Your Best Life Without Breaking the Bank.” 

Jennifer shares what she’s seen Americans struggling with financially through her recent reporting and why so many of us are dependent on credit. Yes, inflation is one big reason, but another is our emotions around the pandemic. Jennifer explains why putting our lives on hold for years has resulted in many of us making up for lost time through “revenge spending.” Listen in to hear how you can process these negative emotions without blowing your budget. 

We also break down the most common myths and misconceptions that people believe about credit cards. Jennifer talks about the number of cards the average person really needs, how much money they should be putting on each card, and why it’s so important to never miss a payment (even if you can only pay the minimum). She also shares tips for asking your credit card company for help — because you don’t have to do it all alone! You can get a late fee waiver or even a lower interest rate by making your case in the right way. 

“Everything is open to negotiation, especially if you are a good customer,” Jennifer says. 

We dive deep into all the different ways you can pay off your debt as quickly as possible. Jennifer explains why the avalanche debt repayment method is her favorite, and how a balance transfer card can be a great option for lowering the amount you owe in interest — as long as you pay down all of your debt during the promotional period. 

Another major part of being credit card savvy is knowing what goes into your credit score. We break down what goes into that mysterious three-digit number, how often you should check it, and where you can find that information for free. 

In Mailbag, we answer questions about transitioning to Medicare and HSAs versus FSAs. In Thrive, we share easy food swaps to save money during inflation. 

MORE ON HERMONEY: 

• The Dos and Don’ts of Credit Right Now
• 4 Easy Hacks to Increase Your Credit Score
• 7 Ways to Get More From Your Rewards and Points
• How I Traveled The World For 18 Months And Saved Money

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