I have a large amount of credit card debt. How can I pay them off and save on my monthly payments?

[Onswole]

I've unfortunately have gotten into a large credit card debt situation. I am not behind but I want to find a way to be able to pay them off and if possible save on my monthly payments that I am paying to each of them separately.

[Mikel Van Cleve USAA]

Hi Onswole,

Thank you for your question. Let's see if we can help you attack your credit card debt situation. We will use what we call the 3 A's approach.  

Step One: Assess the amount of debt you have and the interest rates. Pull together your statements and check your credit reports to ensure everything is accurate and nothing is overlooked. You will also want to review your current income and expenses to see if you can free up any additional funds to pay off the debt faster. 

Step Two: Attack your credit card debt with a strategy that allows you to save time and money. You can use our USAA Debt Manager Tool to create a repayment plan. You can also consider a balance transfer or a personal loan to consolidate payments to a lower interest rate, depending on what rate(s) you are currently paying on your credit cards. 

Step Three: Avoid adding any more debt by putting the credit cards away. You can freeze them, put them in a safe, or cut them up - whatever method works best for you and keeps you from using them again. It's generally not a good idea to close the accounts as it could have a negative impact on your credit, but if you know you cannot resist the temptation, it is another option to consider. 

One last thing to consider, before you pay extra towards the debt, be sure you have at least a $1,000 saved up and set aside for emergencies. This may seem counter-intuitive since savings accounts are paying much less than the interest on your credit cards, but without this safety net, getting and staying out of debt will be extremely challenging. Life happens!

I hope this approach will help you as you work to payoff your credit card debt. Please let us know if you have any additional questions, and best of luck!

Thanks,

Mikel