Credit card balances hit $1.26 trillion in the second quarter of 2026, up $54 billion from the prior year, according to the Federal Reserve. With high borrowing costs, carrying a balance grows expensive quickly. A 2026 Achieve survey found that 43% of Americans feel credit cards and other short-term debts are blocking their long-term financial goals.
Paying more than the minimum payment each month cuts both the payoff time and interest charges. On a $6,500 credit card balance with a 23.99% APR and a $146 minimum payment, paying only minimums takes more than nine years. Adding an extra $100 monthly cuts the payoff to just over three years and saves nearly $7,000 in interest.
Map out a payment plan rather than paying debts randomly. List each loan and credit card with its balance, APR, and minimum payment. Calculate how much extra money you can redirect to debt each month after covering necessities.
Two popular strategies compete for attention. The debt avalanche targets high-interest debts first, paying minimums on everything else while directing extra payments to the highest-rate debt. This approach costs the least in interest. The debt snowball focuses on smallest balances first, which may provide quicker wins but costs more overall since other high-interest debts continue accruing charges.
Cut discretionary spending first, including eating out and entertainment. If needed, trim essential bills by 5% to 10% through steps like adjusting your thermostat or shopping for lower insurance rates. Direct any bonuses or tax refunds toward debt repayment. Avoid draining your emergency savings entirely, since unexpected expenses could push you back into debt.
Debt consolidation swaps high-interest debt for lower-interest debt through a personal loan, home equity loan, or home equity line of credit. Balance transfer credit cards offer 0% interest for a limited period but charge a transfer fee. You typically need a solid credit score and payment history to qualify for favorable rates on these options.