With
credit card debtreaching an
all-time high, now is the time for the most pertinent questions and answers surrounding a difficult reality many Americans are facing.
Credit card debt rose to a record $1.17 trillion in the third quarter, per
the New York Federal Reserve.
From how to pay off your debt to consolidating credit card debt and more,
NewsNation has answers for you.
How to pay off credit card debt
There are two
common strategies for paying off credit card debt: the avalanche method and the snowball method.
In the avalanche strategy, you prioritize paying off debt with the highest interest rate. Start by listing your debt from highest interest rate to lowest and then put as much money as possible toward the debt with the highest rate.
The snowball method focuses on paying off the smallest balance first and building momentum from there.
Other options can include asking your card issuer for a lower interest rate, considering a
balance transfer or engaging with nonprofit credit counseling firms such as
Money Management International and
GreenPath.
How to consolidate credit card debt
Debt consolidation is what it sounds like: the process of combining your debts into one, leaving you with one payment.
In some cases, this can be easier to manage for individuals. Debt consolidation can be achieved via balance transfers or consolidation loans.
A balance transfer is a refinancing method that allows you to move debt from a high-interest credit card to a new card with a lower rate, often a 0% interest rate, for a temporary time.
Balance transfers generally require a credit score of 690 or higher. Applying for one will affect your credit score but not dramatically.
Another option is to apply for a new loan from a bank, credit union or online lender. The money from this loan can be used to pay off credit card debt, but you will be responsible then for paying back the new loan, often over a period of two to seven years.
While you will still be in debt, you will only have one creditor to pay back under a debt consolidation.
What happens to credit card debt when you die
Debt is
not forgiven once a person dies. However, there are instances where it can go unpaid.
Almost half of Americans believe they will die while still in debt and are concerned about whether loved ones will have to pay it off, according to
Policygenius 2024 Financial Planning Survey.
Family members are not usually responsible for this unless they live in a state where surviving spouses must use joint property to pay it off. Other exceptions include if a spouse has a joint credit card account or co-signed a loan.
The most common means of paying off the debt of a deceased person is via money and properties they leave behind.
NewsNation’s Katie Smith, Andrew Dorn and Ashley Soriano contributed to this report.
www.yahoo.com
