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How to Free Yourself From Credit Card Debt

4 strategies to reduce stress and pay down balances

graphic of a credit card that has a hole in it and a person is trying to climb out of the hole

Chris Gash

En español | Add burdensome credit card debt to the list of woes the pandemic has made worse for older Americans. New surveys confirm what your letters have already told me: Many of you are struggling to make monthly payments while balances grow. And even those of you who aren't struggling are carrying more of this debt, and paying more interest, than you were before.

So, burn debt we must. If you're carrying $5,000 at current rates of just over 16 percent, you're paying about $67 a month in interest. That drain on your money gets in the way of everything else you want to do, including sleep soundly.

I'll assume you've already dug deep for cash to pay down the balance — held a yard sale, taken on a side gig, sold a car, or used part of a tax refund or stimulus check. That's good, since every extra dollar you pay beyond the minimum is a dollar on which you won't be paying interest.

But if you're still in trouble, you haven't run out of options. Lenders understand that household budgets have been squished, and there are signs of both increased forbearance and new card offers that can make it easier to get back to zero.

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Before I get to options you might have, I'll make one important point: Don't miss or delay minimum payments while you plot your strategy. Doing so will lower your credit score and take some of the best solutions off the table.

With that said, here are four distinct ways to work it now.

1. Transfer your balance.

Zero-interest-rate introductory balance transfer offers on cards were scarce in 2020, but more are arriving now, says Sara Rathner, a credit cards expert at the personal finance website NerdWallet. These cards typically charge as much as 5 percent of the transferred balance up front, so this works only if you get an introductory deal long enough for you to make a big dent in your balance. This spring, Rathner found, the U.S. Bank Visa Platinum card was offering one of the longest no-interest periods: 20 months. The Citi Double Cash card was offering 18 months at zero interest.

2. Ask for a break.

COVID has made card issuers more flexible. Since the beginning of 2020, roughly 83 percent of people who asked for a rate cut got it, LendingTree reports. Many issuers have had special programs for struggling cardholders, said Bruce McClary of the National Foundation for Credit Counseling (NFCC). He says to tell your lender that the coronavirus affected your finances and that you intend to keep up your payments and reduce your balances, but that more affordable terms would help. Your issuer might lower your interest rate for six to nine months, he says.

3. Refinance with a personal loan.

Ask your credit union or bank if you can roll all your card debt into one lower-interest loan. The average rate on a two-year personal loan from a bank was under 10 percent at the end of 2020, according to the Federal Reserve. That may be a better deal than you can get from your card issuer. Don't borrow against your home or your car to pay off your card; that creates a new risk of losing your possessions. And don't grab at “debt consolidation loans” from companies you've never heard of. Chances are too high that they'll load you up with new fees or, worse, scam you.

4. Get a workout plan.

One final way out is to create a payoff plan via a nonprofit credit counseling agency, which you can find through At no cost, a counselor will go over your income and debts and determine what's workable. Then the counselor will negotiate with your lenders, typically getting their buy-in on a payment plan that will lower your interest and monthly payments and maybe forgive some debt. If you reject the plan, you're no worse off than you were before. Accept it, and you'll start making one monthly payment to the counseling service, which will in turn pay the issuers. You'll likely pay a small fee and give up the cards included in the plan. But over time you'll be able to repay debt and rebuild credit. More importantly, you'll be able to shed the burden and the worry of your debt.

Linda Stern, former Wall Street editor for Reuters, has been covering personal finance since the 1980s.

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