If you have credit card debt, you’re not alone: The average US household owes more than $8,000 on credit cards. Don’t panic! Ariel Anderson, CFP®, has a way out.

Credit cards can be great tools for earning rewards, acquiring large purchases, and establishing credit. But they can be equally as harmful: Carrying a balance from month to month usually means expensive interest payments and negative implications for your credit score. WalletHub recently released a survey on credit card trends for US consumers, and the findings were a bit alarming (to say the least).

Spoiler alert: If you have credit card debt, you’re not alone. In fact, in 2016 the average household had $8,377 owed on their credit cards. According to the study, outstanding credit card debt is at its highest point since the end of 2008, and we now owe almost exactly as much as we did right before the Great Recession of 2008. But don’t panic! We’ve got five ideas to help you reach debt freedom.

  1. Pay attention to your spending. Whether it be through a website, app, or even using pen and paper, make an effort to know where your money goes. A dollar spent is a dollar that’s not applied to your debt or other savings goals. While it’s OK to leave room for the things that make you happy, you may find some areas where you’re willing to scale back in order to free up money to apply toward your credit card. (Check out our Spending Plans online class for ways to get started.)
  1. Build an emergency fund. If you don’t want to rely on credit cards when the going gets rough, it’s good practice to maintain an easily accessible account with enough savings to cover several months of expenses. Having this savings means you won’t need your credit card to cover living expenses in the event of job loss, illness, or other financial emergency. Tackling credit card debt takes time and effort—once it’s paid off, make sure you’ve set yourself up for future success!
  1. Check your credit score. Credit can impact everything, from your ability to rent an apartment to the interest rate you’ll pay on an auto loan. (There are even some employers who check the credit of their candidates!) Credit card debt typically has a negative impact on your score, so it’s good to know where you stand. Websites like CreditKarma will give a detailed breakdown of your score so you can see which areas may need some work.
  1. Get organized and choose a payoff strategy. If you have multiple credit cards or different types of debt, get organized by comparing the terms in one place. Using paper or a spreadsheet, write down each loan type, interest rate, minimum monthly payment, and remaining balance. Always pay the minimum payments. Then, if you have a little wiggle room in your monthly cash flow, decide which loan you’d like to tackle first with extra debt payments. There are two common approaches for determining where to start, called the “avalanche” and “snowball” methods. In the avalanche approach, you attack the debt with the highest interest rate first, resulting in less interest paid over the life of the loan. In the snowball method, you attack the debt with the lowest remaining balance (for example, the $300 balance on your Home Depot card). Doing this enables you to fully pay off one debt — which will feel good and hopefully create momentum to tackle the next when you can. Both methods are effective ways to decrease your overall debt. Want to learn more? Check out our debt repayment calculator.
  1. Do a balance transfer. Many cards will offer 0 percent interest on balance transfers for a set period of time (sometimes a year, sometimes 18 months—it depends on the promotion). If you review your budget and can make a plan to pay off your debt within this promotional window, a balance transfer might be a useful technique for avoiding interest charges and putting every dollar paid directly toward the outstanding balance. Watch out, though—after the 0 percent interest promotional period ends, the applied interest rate may actually be quite high, so be sure your plan gets everything paid off before the interest kicks in. Furthermore, be mindful that establishing a new line of credit has implications on your credit score—some negative, some positive. Learn more about credit by checking out our online Credit Hacks class.

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Ariel is a CERTIFIED FINANCIAL PLANNER™ professional who believes that good financial advice starts with asking the right questions and determining how each Grownup personally defines success.

Any third-party resources or websites referenced above are not under Society of Grownups control. Society of Grownups cannot guarantee and are not responsible for the accuracy of the resources, websites, or any products or services available through such resources or websites.

While Society of Grownups hopes the information is useful, it’s only intended to provide general education. It’s not legal, tax, or investment advice, and may not apply or be useful to your specific financial situation. If you need recommendations geared to your personal financial situation, schedule time with a financial planner professional.

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