Newsletter 2025 V2 Article - Ask a Money Guide

Q: What do I do with my credit card debt?"

A: “Credit card debt can feel overwhelming and insurmountable, but it is possible to pay it all off. Here are a few tips on how to approach this challenge and reach your goal of being debt free:” 

• Get the full picture. 
  Determine the root cause behind high balances. Are you using credit cards as an extension of income? Build a budget that allows you to get a better picture of your income vs your expenses. Is there a positive or a negative net difference? If the net difference is positive, use the cash flow to help pay down your credit card balance. If the net difference is negative, determine if you need to cut down spending, boost income, or both.
• Choose a payoff strategy. 
  Understand if a balance transfer is right for you. Look around to see if you can find a balance transfer special offering 0% interest for a defined period on the balances you transfer over. If you believe that you can pay off your balance within the window of the promotional rate period, this option works. Determine if balances with higher interest rates are worth paying off first or if it’s easier to pay off smaller balances first. Consider consolidating your debt. It may be easier to pay off balances with one payment for a fixed term.
• Ask for help. 
  Avoid debt relief scams! Be aware of the many companies out there that advertise a debt-free future at an unknown cost. Reach out to the creditors. Many creditors are more than happy to offer some assistance. They may be able to postpone your payments, lower your interest rate, or settle for a lower amount. Don’t fall behind. If you find it hard to keep up with your repayment plan, be sure to at least make the minimum payment, and avoid hurting your credit score.

If you’re struggling to work through these steps, schedule a meeting with a UMassFive Money Guide! 

We offer free financial counseling sessions to members who are looking for guidance on their financial journey. 

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