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If you’re carrying serious credit card debt — like $15,000 or more — you're not alone. The average household with revolving credit card debt — that is, debt that they carry from one month to the next — had more than $7,000 worth of revolving balances in 2019. That's just the average. It's not at all uncommon for households to be swimming in more that twice as much credit card debt.
But just because a $15,000 balance isn't rare doesn't mean it's a good thing. Credit card debt is seriously expensive. Most credit cards charge between 15% and 29% interest, so paying down that debt should be a priority.
However, dealing with a five-digit credit card debt can feel overwhelming. Coming up with that kind of cash is daunting, but there are steps you can take to manage a heavy debt load:
1. Stop charging
If you’re used to relying on your credit card to make your day-to-day purchases, cutting yourself off from charging might be really tough at first. But to get out of a hole, you’re going to have to stop digging.
It is essential to stop adding new debt by switching to cash or debit as soon as possible. If you know you’ll be tempted to charge, consider taking drastic steps: Cut up your card, or hand it over to a trusted friend or family member so that you won’t have easy access to it. Just do whatever you have to do to stop the bleeding.
Take charge and banish debt
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One of the worst things that you can do when you’re in credit card debt is pay only the minimums. Minimum payments equate to only 2-3% of the balance owed on the card, so if you don’t start upping your monthly payments, you’re going to be in debt for a very long time. This also means that you’ll be shelling out thousands in interest.
Paying at least double the required minimum payment every month will speed up your debt repayment plan substantially, but more is obviously better. Cut expenses in other areas to throw cash as possible at your plastic – it may be a sacrifice now, but the money you’ll save on interest by cutting down your debt as fast as possible will be well worth it.
If your credit score is good enough to allow it, it’s a smart idea to transfer your high-interest credit card debt to a lower-interest card. This will speed your debt repayment quite a bit, because you’ll be paying off the principle and any interest charges you’ve already accrued — new interest charges won’t be piled on every month, at least for awhile.
» MORE:Best balance transfer credit cards
4. Look into consolidating
If your credit card debt is spread between several high-interest cards, consolidating them all into a low-interest loan might be your best bet. Not only is it easier to deal with only one monthly payment, but if you choose your consolidation vehicle carefully you’ll also be paying a much lower interest rate. But this is where it’s important to be careful: Your consolidation loan’s interest rate needs to be lower than the lowest interest rate on your cards. Otherwise, consolidating isn’t worthwhile.
» MORE:Best debt consolidation loans
5. Consider credit counseling
If you’re feeling anxious and stressed about your credit card debt and can’t seem to get it under control no matter what you do, it might be time to consider credit counseling. Nonprofit credit counseling agencies will examine your whole financial situation and make specific recommendations based on your needs. Just be sure to work with a reputable agency, and commit to following the advice they provide.
» MORE:How credit counseling can help you
The takeaway: If you’re drowning in credit card debt, don’t despair. It may not be easy, but you can take steps to tackle your outstanding balance. With a stiff co*cktail of patience and discipline, you’ll be debt free sooner than you think!
A balance transfer works when you need $15,000 or less and can pay it off in 21 months or less. If you have more debt, you may need to consider other options, such as a personal loan, for the excess. Expect a loan to carry rates between 12% and 25% APR, according to NerdWallet data.
It's not at all uncommon for households to be swimming in more that twice as much credit card debt. But just because a $15,000 balance isn't rare doesn't mean it's a good thing. Credit card debt is seriously expensive. Most credit cards charge between 15% and 29% interest, so paying down that debt should be a priority.
It will take 32 months to pay off $15,000 with payments of $600 per month, assuming the average credit card APR of around 18%. The time it takes to repay a balance depends on how often you make payments, how big your payments are and what the interest rate charged by the lender is.
Chapter 7 bankruptcy: This fairly quick legal process can wipe out your unsecured debts through what's called a “discharge.” Chapter 13 bankruptcy: Chapter 13 can also result in a discharge, but typically only after you complete a 3-5 year repayment plan.
If your total balance is more than 30% of the total credit limit, you may be in too much debt. Some experts consider it best to keep credit utilization between 1% and 10%, while anything between 11% and 30% is typically considered good.
Anything over 30% credit utilization will decrease your credit score. So, you can use this as a measure of when you have too much debt. Consolidated Credit offers a free credit card debt worksheet that makes it easy to total up your current balances and total credit limit.
Credit card debt forgiveness is when some or all of a borrower's credit card debt is considered canceled and is no longer required to be paid. Credit card debt forgiveness is uncommon, but other solutions exist for managing debt. Debt relief and debt consolidation loans are other options to reduce your debts.
Unfortunately, there is no such thing as a government-sponsored program for credit card debt relief. In fact, if you receive a solicitation that touts a government program to get you out of debt, you may want to think twice about working with that company.
If the minimum payments are equal to interest plus 1% of the balance, it would take 342 months to pay off the debt by making minimum payments alone. That's 28.5 years. During that time, you'd pay $14,423 in interest. That's much more than the original balance on the card.
Keep in mind that at 0% interest, you would need to pay over $550 per month to pay $20,000 off in three years. Moreover, balance transfer credit cards typically come with transfer fees. So, you'll need to consider these fees as part of the debt repayment plan.
To pay off $15,000 in credit card debt within 36 months, you will need to pay $543 per month, assuming an APR of 18%. You would incur $4,558 in interest charges during that time, but you could avoid much of this extra cost and pay off your debt faster by using a 0% APR balance transfer credit card.
You make one payment 15 days before your statement is due and another payment three days before the due date. By doing this, you can lower your overall credit utilization ratio, which can raise your credit score. Keeping a good credit score is important if you want to apply for new credit cards.
By making a credit card payment 15 days before your payment due date—and again three days before—you're able to reduce your balances and show a lower credit utilization ratio before your billing cycle ends. That information is reported to the credit bureaus.
Yes, $15,000 is a high credit card limit. Generally, a high credit card limit is considered to be $5,000 or more, and you will likely need good or excellent credit, along with a solid income, to get a limit of $15,000 or higher.
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