Show me the money: credit card debt

(WHTM) — More than a third of Americans added personal debt over the past holiday season, much of it on credit cards. If you have credit card debt, you need to spend money, and there are smart ways to do it.

Credit card holders have more than $5,000 in debt on their cards on average. And with vacation bills now due, it can be difficult to manage that debt.

Experts say there are several strategies for paying off your credit card balances.

“One is called the debt avalanche method. The idea is that you attack the card with the highest interest rate on it. Pay minimums on all your cards, but bet more on this highest-interest card because again, it’s your most expensive debt,” said Farnoosh Torabi, editor-in-chief of CNet Money.

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Another way is to use the debt snowball method.

“Debt snowball is all about small steps, starting with the smallest balance first. Why? Because in theory this should be relatively easy to overcome,” Torabi said.

You can also lower your payments by transferring your balance to a card that doesn’t charge interest for a set period of time, usually 12-15 months.

“The caveat to this is that if you are older than 15 months and you still have balance on that balance transfer card, the interest will be very high in some cases. And you’re back where you were a little over a year ago and you’ll have to pay interest again,” Torabi said.

Another option is to consider a personal loan with an interest rate lower than your cards.

No matter how you handle your credit card debt, experts say you should always have a spending plan.

“You can’t get out of debt if you don’t have a budget. These two things go hand in hand. So as you think about reducing your debt burden, you also want to consider how you spend and make sure it aligns with your goals for paying off your debt,” Torabi said.

Other simple tips for avoiding credit card debt — try to pay more than just the monthly card minimum and automate your payments to avoid paying expensive late fees.

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