With credit card debt reaching unprecedented levels, it’s crucial to address the pressing questions and solutions for many Americans facing this challenge.

According to the New York Federal Reserve, credit card debt hit a record $1.17 trillion in the third quarter.

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From paying off debt to consolidating it, here are some strategies and insights to help you navigate this financial hurdle.

How to Pay Off Credit Card Debt

There are two popular methods for paying off credit card debt: the avalanche method and the snowball method.

• Avalanche Method: Focus on paying off debt with the highest interest rate first. List your debts from highest to lowest interest rate and allocate as much money as possible to the highest rate debt.
• Snowball Method: Start by paying off the smallest balance first, and use the momentum from clearing that debt to tackle the next smallest balance.

Other strategies include asking your card issuer for a lower interest rate, considering a balance transfer, or working with nonprofit credit counseling firms like Money Management International and GreenPath.

How to Consolidate Credit Card Debt

Debt consolidation simplifies your financial obligations by combining multiple debts into one payment. This can be achieved through balance transfers or consolidation loans.

• Balance Transfer: Move debt from a high-interest credit card to a new card with a lower interest rate, often 0% interest for a limited period. Generally, a credit score of 690 or higher is required for balance transfers.
• Consolidation Loan: Apply for a new loan from a bank, credit union, or online lender to pay off credit card debt. You’ll then make payments on this new loan, usually over two to seven years.

While you will still be in debt, consolidation means you only have one creditor to pay back.

What Happens to Credit Card Debt When You Die

Debt does not disappear upon death, although there are circumstances where it may go unpaid.

Nearly half of Americans believe they will die with debt and worry about their loved ones having to pay it off, according to the Policygenius 2024 Financial Planning Survey.

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Family members typically are not responsible for the debt unless they live in a state requiring surviving spouses to use joint property to pay it off or if they have a joint credit card account or co-signed a loan.

Usually, the debt of a deceased person is paid off using the money and properties they leave behind.

Understanding these strategies and how to manage credit card debt can help you take control of your financial future.

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