myFICO: What to Do if You’re Struggling with Credit Card Debt

SAN JOSE, Calif .– (BUSINESS WIRE) – Credit cards can offer added convenience and security to your everyday spending, and many even offer sign-up bonuses and rewards to add even more value.

But if you’re not careful, it can be easy to fall deep into debt with credit cards, and the larger your balances grow, the harder it will be to pay them off, particularly if interest rates are on the rise. If you’re currently struggling to keep up with your credit card debt, here are some potential solutions you can pursue, from myFICO.

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Look at Your Budget

If you don’t already have a budget, consider creating one now. Start by taking the average of your income over the last few months, then list out and categorize all of your expenses so you have a better understanding of where your money is going.

This practice will help you determine whether there are areas in your spending where you can cut back and put the cash toward your credit card balances instead. Setting monthly spending goals with your budget will also make it easier to stick to your debt payoff plans and make adjustments as necessary.

List Out Your Debts

If you only have one credit card, the payoff process will be relatively simple. But if you have balances on multiple cards, you’ll want to know what you’re dealing with.

Log in to each of your online accounts and obtain the balance, minimum monthly payment, and interest rate for each card. This will help you know which cards to target first.

At this stage, it’s also a good idea to stop using your credit cards, so the non-interest part of your balance doesn’t continue to grow. If you continue using your cards while trying to pay them off, it may feel like you’re spinning your tires.

Talk with Your Credit Card Issuer

Depending on the situation you’re in, you may be able to get some short-term relief from your credit card company. Some card issuers offer forbearance programs, allowing you to pause your payments while you get back on your feet financially.

You may also be able to ask for a lower interest rate or a modified payment plan to make your payments more affordable.

While there’s no guarantee that your credit card company will help you, it doesn’t hurt to ask while you’re trying to figure out what to do next.

Consider the Debt Snowball or Debt Avalanche Method

The debt snowball method is a popular approach to paying off multiple debt accounts. With this strategy, you’ll begin by making the minimum monthly payment on all of your accounts, and if you have extra cash you can put toward your debt, add that to the card with the lowest balance.

Once you’ve paid off that card, you’ll take the amount you were putting toward it and add it to the minimum payment of the card with the second-lowest balance. You’ll keep doing this, with the monthly payments continuing to grow bigger as you pay off each balance, until you’ve paid off all of your cards.

The debt avalanche method is a similar approach, but instead of focusing on the cards with the lowest balances, you’ll start with the cards that have the highest interest rates.

The snowball method is designed to give you some wins early on in the process as you pay off smaller balances. But over time, the avalanche method could save you more in interest.

Add in the Debt Snowflake Method

The debt snowflake method can be used in conjunction with either the snowball or avalanche method. With this approach, you’ll take any extra money you get throughout the month and put it toward your debt.

On a larger scale, this can include your tax refund or performance bonus at work, but it can also be smaller things, such as rewards earned from a cash-back shopping website or savings you get from using coupons or cutting subscriptions.

Consider Another Financial Product

If your FICO® Score is still in good shape, you may be able to qualify for a balance transfer credit card or a personal consolidation loan.

Balance transfer cards typically offer introductory 0% APR promotions, allowing you to move debt from the original card to a new one and pay it off interest-free for a period. Even if you can’t pay it off completely by the end of the promotion, you may still save hundreds of dollars in interest.

That said, balance transfer cards come with an upfront balance transfer fee, so you’ll want to crunch some numbers to make sure it still saves you money. Also, if you’re not disciplined with your payments, you may still have a lot of debt by the time the promotional period ends and the card’s regular APR kicks in.

With a personal loan, you won’t get a 0% APR, but with good credit, you may be eligible for a single-digit interest rate. What’s more, unlike credit cards, personal loans come with a structured repayment term, so there’s no danger in getting complacent with a small minimum payment and remaining in debt. Just be sure that you can afford the monthly payment and watch out for upfront origination fees.

Consult with a Credit Counselor

With a free consultation, a reputable credit counseling agency can help you make sense of your situation and guide you through some of the options at your disposal. You can find nonprofit agencies through the National Foundation for Credit Counseling or the Financial Counseling Association of America.

If you’re really struggling and your FICO® Score is too low for a low-interest personal loan or balance transfer credit card, the credit counselor may offer to help you with a debt management plan.

With a debt management plan, the agency can negotiate a lower interest rate and monthly payment with your credit card issuers. Then, you’ll get on a payment plan that typically lasts between three and five years, making one payment to the agency, which will distribute the money to your creditors.

In exchange, you’ll need to close all of your credit card accounts. Additionally, there is a modest upfront fee, as well as a small monthly fee. However, this option can help you avoid some of the damage to your FICO® Score that debt settlement and bankruptcy would do.

Think About Debt Settlement or Bankruptcy

While these options aren’t ideal, they may be necessary if you’re already far behind on your payments.

With debt settlement, you agree to pay less than what you owe in a lump sum. If you don’t have the cash now, you may be able to work with a debt settlement company or a debt relief law firm to build up enough cash over time. Make sure to thoroughly research any debt settlement institution you are considering and read all the “fine print” of their application. Once the settlement is completed, the card issuer will accept your payment and cancel the rest of the debt.

Bankruptcy, on the other hand, could wipe out the debt entirely or at least help you get on a reorganized payment plan that fits within your budget.

Consider these options as a last resort only. While they may seem like an easier solution, they can damage your FICO® Scores, making it difficult to obtain credit when you need it. If you’re considering debt settlement or bankruptcy, speak with a reputable credit counselor first to get some expert advice.

The Bottom Line

Credit card debt can easily become a significant financial burden, so it’s always a good idea to try to pay your balance in full every month. But if your debt has already started to grow out of control, get a budget in place and think carefully about all of your options.

There’s no single best way to pay off credit card debt, so develop your strategy based on what works best for you.

About myFICO

myFICO makes it easy to understand your credit with FICO® Scores, credit reports and alerts from all 3 bureaus. myFICO is the consumer division of FICO– get your FICO Scores from the people that make the FICO Scores. For more information, visit

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