When we think about consumer debt, it’s easy to assume younger folks are the source of it. But actually, many older Americans carry their share of debt, too. In a recent survey by Clever, it was revealed that 76% of retired Americans have some form of debt. And 67% of retirees have a balance on their credit cards that isn’t paid off.
The problem with credit card debt, though, is that it can be costly. And since credit card interest can be variable, it’s easy to get trapped in a cycle where that debt grows increasingly difficult to pay off.
This especially holds true for retirees who are on a fixed income. If you’re largely limited to Social Security as your income source, you may not have a lot of room in your budget to chip away at credit card debt faster than your current pace. But if you’re eager to eliminate that debt for good, here are three steps worth taking.
1. Find part-time work
Many seniors resign themselves to living on Social Security benefits. But these days, it may be easier than you’d think to get a part-time job that could boost your income and give you money to pay off your credit card debt.
A lot of employers have gotten used to remote work due to the pandemic and are now more flexible. As a result, you may be able to consult in your former field from afar and increase your earnings in the process. For example, if you were a former number cruncher, you may be able to secure some remote bookkeeping jobs or even data entry work.
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2. Consolidate your debt via a balance transfer or personal loan
If you’ve managed to keep your credit score in good shape during retirement, then there may be a way for you to make your credit card debt more affordable, which could also make it easier to pay off. If you move your balances onto a new credit card with a lower interest rate – or better yet, a 0% introductory rate – then you might have an easier time getting ahead of that debt and shedding it for good.
Another option is to apply for a personal loan. You’ll generally pay less interest on one of these loans than what your credit cards will charge you. So if you can’t do a balance transfer or don’t want to go that route, a personal loan is a reasonable alternative.
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3. Tap home equity to make your debt more affordable
If you’re retired and own a home, chances are, you have a fair amount of equity in it. This especially applies right now, since home values are up on a national scale.
>Just as doing a balance transfer or taking out a personal loan could make your credit card debt more affordable to pay off, so too could taking out a home equity loan or line of credit (HELOC). If you’re able to borrow against your home, you could pay off your credit cards and then repay your home equity loan or HELOC at a lower interest rate.
That said, you’ll need to be careful to keep up with your home equity loan or HELOC payments. Falling too far behind could put you at risk of losing your home. But these are options worth pursuing if you want to pay off your credit cards and don’t want to take on the risks of getting a reverse mortgage.
The fact that so many retirees have credit card debt isn’t surprising. But if you’re in that boat, your best bet is to pay off that debt as soon as possible – and these strategies could be your ticket to doing just that.
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