With many people out of work due to the closures of non-essential businesses for several months during the pandemic, many Americans are experiencing tough financial times. With lowered income, there has been an increased reliance on savings and/or credit cards to pay bills and provide for family needs. In recent months, credit card debt has soared, leaving many overwhelmed with determining how to pay it back. If you have found yourself making minimum payments on your credit cards and your outstanding balances are not decreasing, here are a few tips for tackling debt:
1. Create a Budget

The first step in achieving any financial goal is to create a budget. This is your roadmap to reaching your debt-free dreams. A budget details your monthly income as well as your monthly expenses, including non-necessities. Take time to analyze where you are spending your money, see if there are any ways that you can cut back, and put that extra money toward your debt.

2. Stop Spending on Your Credit Cards
Make the commitment to stop spending on your credit cards. You don’t want to pay your debt down only to increase it all over again. This is a cycle that will work against your financial freedom. The toughest part in paying off debt is changing your habits, but this is a necessity!

3. Pay More Than the Minimum
It’s important to pay more than your minimum balance if at all possible. Depending on the size of the debt, some balances can take years to pay off if you are only making the minimum payment. The payoff can be accelerated by paying more each month!

4. Throw Any Bonuses at Your Balances
Use any extra money that you were not expecting, such as a work bonus, to pay down your debt.

5. Use a Credit Card Balance Transfer
A credit card balance transfer is usually a practical option for those with an excellent credit score who don’t wait until their debt is out of control to act. The biggest downside is typically the high fees that can be incurred with balance transfers. In the right circumstances, you can qualify for a new credit card that offers a lower rate, but be sure to factor in any balance transfer fees.

6. Delete Financial Information From Online Retailers
Saving your credit card information on your favorite sites makes it too easy to buy online and rack up your debt. The best thing to do is to delete your financial information from the online shopping platforms you frequent. This will create a bit of a roadblock when it comes to purchasing online and having to take an extra step to plug in your card information may give you just the right amount of time to pause and think twice about your purchase.

7. Sell Items Around Your House
Take a look around your house and see if there is anything that you rarely use anymore and can get rid of. There are so many platforms nowadays to sell used items and as the old adage goes, one person’s trash is another person’s treasure. Even small amounts of cash for your goods can add up in the long run, and you can put the extra money toward your debt!

Additionally, here are a couple of strategic methods that can help you get out of debt faster:
  • Snowball method: Make the minimum payments on your larger debts while focusing on paying off your smaller balances first. As you payoff the smallest balance, you move to paying off the next smallest.
  • Avalanche method: Focus on paying off your credit cards with the highest interest rates first. Similar to the snowball method, once you pay off your highest interest rate credit card, then move to the paying off the balance on the credit card with the next highest interest rate.
Lastly, if these approaches are not appealing to you and you are considering consolidating your debt, make sure you are aware of these debt elimination scams below.

Debt Consolidation and Debt Elimination Scams
Try to avoid debt relief organizations that do the following:
  • Charges any fees before it settles your debt or enters you into a debt management plan requiring payment to do so.
  • Touts a "new government program" to bail out personal credit card debt.
  • Guarantees it can make your unsecured debt go away and tells you to stop communicating with your creditors, but doesn’t explain the serious consequences.1
If you’re looking to consolidate your debts, consider visiting a SDCCU Branch near you to discuss the best options for your financial situation. SDCCU customers also have access to view and download tools and resources for free from our partner Balance Financial at sdccu.balancepro.org.

1. Debt Settlement and Debt Elimination Scams: https://www.consumer.ftc.gov/articles/0150-coping-debt