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Credit card debt is on the rise, and with rates at their highest point on record, it’s no surprise.
For many consumers, Black Friday — and the entire upcoming holiday season — will only aggravate the issue, leading to even more in stressful credit card debt. Fortunately, there are things you can do to prepare and, ideally, reduce your debt before going into the holiday season.
Want to make sure you’re prepared as Black Friday rolls around? We asked some experts for their suggestions.
Start exploring your top debt relief options online now.
How to lower your credit card debt this Black Friday
Here are four effective ways credit card users can start lowering their credit card debt now:
Consolidate your debt
One great option is to consolidate your debt. If you have multiple credit cards (or other debts you’re repaying), you can use one loan or credit card to pay them all off, essentially rolling them all together. Depending on the product you use, it will often mean a lower rate and total monthly payment than before — allowing you to pay off the debts faster.
“Consolidation is a great idea if they can move to a lower or no rate card without a balance transfer fee,” says Mike Chadwick, president at Fiscal Wisdom Wealth Management. “The best time to do this is around the holiday, as the temptation is greatest.”
Just be careful if you opt to use another credit card for consolidation, as that could easily compound your debt if you use the additional credit card for spending post-consolidation. If you opt to use a new card to consolidate, make sure to compare offers from different card issuers, as rates and balance transfer fees can vary.
“The options are plentiful,” Chadwick says. “It’s all about shopping around.”
Review your debt consolidation options here.
Negotiate your interest rate
You can also try and negotiate the rate on your existing credit cards. As Jason Fannon, senior partner at Cornerstone Financial Services, puts it, “Call the issuer and ask them for a lower rate.”
It won’t always work, but it’s worth a try. Just remember to come in with reasons as to why you should get a lower rate. Are you facing financial hardship? Are you qualifying for lower offers elsewhere?
“This is a negotiation,” Fannon says. “It allows the borrower to plead their case — they may have excellent payment history, have a competing offer from another issuer, or experiencing temporary unemployment, etc.”
Try debt forgiveness
Debt forgiveness is a type of debt relief you can explore with credit cards. With this, your credit card issuer agrees to forgive some or all of your remaining balance — meaning you don’t have to pay it back.
“Creditors typically only negotiate if you’re behind on payments, though,” says Nate Towers, director of Five Pathways Financial.
Take note: When a debt is forgiven, it’s considered taxable income, so it could increase your annual tax burden.
Focus on a paydown method
You can also focus heavily on paying down your debts aggressively. Two popular methods are the snowball method and the avalanche method. With the snowball method, you focus on paying off your lowest-balance debt first, making only minimum payments on the rest. Once that’s paid off, you focus on the next-lowest debt, and so on.
With the avalanche approach, you “prioritize making the largest payment to the card with the highest interest rate,” Fannon says. “This process will minimize the amount the borrower pays in interest by addressing the highest-interest-rate debt first.”
Get help
If you’re not sure how to best tackle your debt as we get into the holiday season, reach out to a financial advisor, credit counselor, or debt relief professional. They can help you determine the best path forward and help answer your questions.