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Experts offer advice to manage credit card debt

Newseze Wire·Mon, Jul 6, 10:33 PMWire: ABC 7 Los Angeles

Many people rely on credit cards to resolve their financial issues, which has credit card debt reaching record levels.

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# Managing Credit Card Debt in an Era of Record Balances American household credit card debt has climbed to historic levels, driven by inflation, rising living costs, and the familiar temptation to defer financial problems. For millions of cardholders, revolving credit has become a primary tool for weathering unexpected expenses or gaps between income and spending. The issue extends beyond personal inconvenience—mounting consumer debt carries broader implications for household financial stability, spending patterns, and individual long-term wealth accumulation. The mechanics of credit card debt create a particularly stubborn financial trap. Unlike installment loans with fixed payoff schedules, credit card balances can expand indefinitely, especially when cardholders pay only minimum amounts while carrying high interest rates. A $5,000 balance at 22 percent annual percentage rate (typical for many cards) can require years and thousands in additional interest to fully repay if minimum payments are the only commitment. Financial experts increasingly emphasize three core strategies: establishing a written budget that identifies discretionary spending cuts, prioritizing debt repayment through either the "avalanche method" (attacking highest-rate cards first) or the "snowball method" (eliminating smallest balances for psychological momentum), and building an emergency fund to prevent future reliance on plastic. Some advisors also recommend negotiating directly with card issuers for lower rates or hardship programs, particularly for those facing genuine financial hardship. Balance transfer cards—which offer temporarily reduced rates—can provide breathing room if managed carefully, though they often carry transfer fees and carry risks of accumulating additional balances on the original card. The quality of available guidance matters significantly. Nonprofit credit counseling agencies, often found through the National Foundation for Credit Counseling, offer free or low-cost consultations without pushing consumers toward additional borrowing. This contrasts with for-profit debt settlement companies, which sometimes charge substantial fees while making aggressive promises that don't materialize. Legitimate resources emphasize that debt resolution requires sustained behavioral change, not shortcuts. The underlying message from financial professionals is straightforward: credit cards serve a purpose for building credit history and managing cash flow timing, but treating them as income substitutes or emergency-fund replacements inevitably produces compounding consequences. **Worth knowing:** Record credit card debt reflects both economic pressures and spending patterns that individuals can influence. While macroeconomic factors like inflation affect everyone, personal debt management remains largely within individual control through disciplined budgeting and strategic repayment prioritization. Those struggling should seek free counseling before considering debt settlement companies, and should recognize that addressing debt early prevents it from becoming a multi-year financial anchor. Reporting: ABC 7 Los Angeles.

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Experts offer advice to manage credit card debt

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