How to Pay Off Credit Card Debt

Credit card debt is weighing on many Americans.

The share of credit card holders making just the minimum monthly payment is at a 12-year high, the Federal Reserve Bank of Philadelphia reported last month. People are spending more on their cards but paying off less, increasing the amount of debt carried month to month and paying more in interest. And more people are late in paying their monthly card bill.

“Credit card performance is showing signs of consumer stress,” the bank’s report said.

Adding to the stress is the fact that interest rates on credit cards have risen in recent years. The average rate was more than 21 percent at the end of last year, the Federal Reserve said, compared with about 15 percent in 2019.

So whether you observe “frugal” February or try a “no spend” challenge, now is a good time to make a plan to chip away at your balances.

Right after the new year, “people have so many things on their mind,” said Charlestien Harris, a financial counselor in Clarksdale, Miss., with Southern Bancorp Community Partners. “By February, a person has a chance to settle down. You can begin to focus more and name a goal or two.”

If you’re worried about your card debt, there are options that can help you get it under control — such as transferring your balance to a lower-rate credit card, if you qualify. But the first step is to get a clear picture of your spending habits, said Daniel Yerger, a fee-only financial planner in Longmont, Colo.

“Before you consolidate or refinance the debt, you have to address the ‘why’ of what’s happening,” Mr. Yerger said. If you are consistently spending beyond your means, moving the debt to a new card isn’t likely to help in the long run. “We can shuffle it around,” he said, “but you want to get ahead of it.”