Are you feeling overwhelmed with unmanageable credit card debt? That’s no surprise based on J.D. Power’s recent findings, showing that 51% of Americans can’t pay off their entire balance each month. But why are credit cards increasingly hard to pay off?
Record-high interest rates (24.45%, as of September) and increased inflation have Americans feeling the pressure in their wallets. Confirming this is the Federal Reserve’s recent report that credit card debt in the United States has surpassed $1 trillion for the first time. But some resources can help. Enrolling in a debt management program (DMP) can help you navigate these challenging financial times.
What Are My Options for Paying off Debt?
Paying off your debt can be a struggle, but there are several options you can try, like creating a budget and deciding on a repayment method.
Here are some options:
- Debt Avalanche: In this repayment plan, you focus on your card with the highest interest rate (while paying the minimum balance on your other cards). Once you’ve paid that off, you then take the money you were putting on the first card and apply it to the card with the next highest interest rate, and so on.
- Debt Snowball: With the debt snowball, you focus your efforts and whatever additional dollars you can apply toward your card with the lowest amount, so once that’s paid off, you’re incentivized to pay down the next lowest card.
- Debt Management Plan: If your credit card debt is overwhelming, enrolling in a DMP can help you pay off your cards in three to five years, giving you a clear path toward repayment.
How Does a Debt Management Plan Work?
When you enroll in a debt management plan, a credit counselor will meet with you, either in person, over the phone, or via video chat, and help you create a budget specific to your needs. Next, they’ll work with your lenders and consolidate your unsecured debt into one affordable monthly payment. You’ll typically also get the benefit of lower interest rates.
As you pay off your credit card debt, you can feel reassured that you’ll weather these stressful financial times with your credit score intact and professional support to help you stay on track.
Knowing your options can help you prepare your finances for the next step, whatever that may be.
Make a FREE online appointment to discuss your options