What To Do If You Haven’t Avoided Credit Card Debt
Credit card debt will eat you alive—but that stops here.
Rumor has it the average American has around $6K in credit card debt. While that number may be exponentially lower than, say, your student loan debt, it’s still substantial. You could buy a (very) used car with that type of cash.
And while we can joke about being part of the majority and how misery loves company, credit card debt can actually be detrimental to your wealth-building journey.
No more guilt-inducing budgets, crossing your fingers and hoping you’re making the right decisions, and swiping through life one YOLO charge at a time.
Buckle up. Let’s start with the why.
What credit card debt does to your wealth
If investing compounds your wealth in a positive direction, debt has the exact opposite effect.
There’s a TikTok that went viral recently. It featured a girl encouraging people to use their credit card now because you’re manifesting a more financially successful version of yourself to pay off the debt in the future.
Issue #1: going to social media for financial advice
Issue #2: math isn’t magic
While these videos are fun to watch and laugh at from a distance, you cannot take them seriously if you want to be able to accomplish the goals you have for yourself guilt-free.
You also can’t use them to make you feel “better” about your situation. You came here for solid financial advice, right?
Should I pay down CC debt or invest?
There’s really only one answer to this question if you’re paying interest on your credit card debt right now: You should pay down your CC debt before starting to invest.
Over the longterm you can typically expect around an 8% return on a well-diversified investment portfolio.
Credit card debt can run up to nearly 30% in interest.
While the earlier you start investing, the more successful you’re likely to be, the interest from credit card debt can eat away at the money you’re building through investing…and then some.
8%-30% is a negative number. And a big one, at that. You’re going in reverse.
The best debt paydown strategies
If your debt is “manageable”, like completely-have-the-ability-to-pay-it-off-in-one-year-type-“manageable”, here’s what you’re going to do.
Find a credit card with a 12-month 0% APR introductory rate. Transfer your accumulated debt to the card with 0% interest. Then, split the total of your debt up over 12 months to find your monthly debt paydown amount.
Boom.
By the time the introductory teaser rate expires, you’ll have paid down your credit card debt with 0% interest.
But that’s not always possible with credit card debt. Sometimes we rack up way more than we can pay off in one year. Or maybe you’re dealing with debt spread over a few different cards with different interest rates. If you find yourself in this boat, it’s time to utilize one of these two popular payoff methods:
The Snowball Method
With the snowball method, you start by tackling the smallest balance first, then work your way up from there. The goal is simple: build momentum. By putting the majority of your payment toward the smallest debt, you’ll cross off credit cards one by one—and each time you do, you’ll feel a sense of accomplishment.
The best part? Paying off a card means you’ve got one less bill to manage, and that’s always a win. Plus, with fewer payments to juggle, you’re that much closer to financial freedom.
For many people, the snowball method is motivating because you see progress quickly. Once you start knocking out those “easier” debts, it’s easier to stay disciplined and keep the momentum going.
The Avalanche Method
On the flip side, the avalanche method has you focus on the debt with the highest interest rate first. By prioritizing these high-interest balances, you’re saving money in the long run since you’re cutting down on the debt that’s growing the fastest.
As you eliminate those high-interest debts, you’ll see your overall debt start to shrink more quickly. It’s all about efficiency, getting more of your payments directed toward the principal instead of interest.
It might take a bit longer to see noticeable progress compared to the snowball method, but over time, the avalanche method saves you more money. The key here is sticking with it—the more expensive debts go away first, and you’re left with a lighter load in the end.
The Bottom Line
So, you've got a bit of a spending problem, huh? You’re not the only one. No judgment. We've all been there. But let's be real: credit card debt is a financial black hole that's sucking the life out of your wallet.
Don't let those high-interest rates and late fees ruin your future. Take control of your finances, pay off that debt, and start living the life you deserve.
Key Takeaways
Credit card debt is a serious financial burden. High-interest rates can quickly spiral out of control.
Prioritize debt repayment: Focus on paying off high-interest debt before investing or saving for other goals.
Use proven debt repayment strategies: Whether it’s the snowball method or the avalanche method, find a strategy that works for you and stick with it. Small wins lead to big progress.
The F. Word
Ready for some real talk on how to master your money? Pull up a chair and pour yourself a glass.
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