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How to manage, reduce and avoid additional credit card debt

Kelly Kowalski, Cliff Noreen, and Bronwyn Shinnick

Posted on August 03, 2022

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Key takeaways

Cutting debt, but not changing the habits (like the $1,000 pizza) that got you into debt, is pointless. 

Make a list of what you owe monthly per card and the card’s annual percentage rate (APR), then set goals, one card at a time.

Planning for bad times now is a key part of avoiding credit card debt problems in the future.

Paying with plastic is a hard habit to break. That’s an uncomfortable truth everyone reckons with.

America’s outstanding credit card debt now stands at roughly $825 billion, according to statistics from the Consumer Financial Protection Bureau.1 On a practical level, the average indebted household owes $6,006 in credit card debt, costing an average of nearly $1,029 in annual interest, according to a recent study from personal finance company NerdWallet.2

Spending levels, especially those involving credit card purchases, rise and fall with the health of the economy. During the decade long bull market following the financial crisis of 2008, consumer confidence surged alongside credit card balances. Those with high household debt and no emergency fund, however, faced the most severe financial hardship when the coronavirus pandemic hit in early 2020.

Indeed, with the recent downturn in the economy, data from the Federal Reserve Bank of New York shows that credit card balances grew 13 percent year over year, the largest jump since 2002.

Going forward, financial professionals offer advice for how to manage credit card debt by digging out of it and preventing it in the first place.

The credit card debt problem: A $1,000 pizza

Cutting debt, but not changing the practices that got you into debt, is pointless. Look at what you’re buying and why. You may think you spent $40 when you charged a couple of pizza pies from your local pizzeria, but if it takes you five years to pay off the debt, your pizza could end up costing you $1,000.

Go through your online card statements for the last year and see what you actually charged, said Brent Neiser, CFP® and senior director of strategic programs and alliances at the non-profit National Endowment for Financial Education (NEFE). Charges for items you would never want to pay interest on should be flagged.

“When people really understand what got them into debt in the first place, they are less likely to make the same kinds of purchases on credit in the future,” he said.

How to reduce credit card debt

Make a list of what you owe monthly per card and the card’s annual percentage rate (APR). Have a specific goal in mind for cutting debt like: “I want to pay $50 per month per card over the minimum” or “I want to pay off my credit card in six months.”

Pay the minimum on everything except the card with the highest interest rate, on which you pay more. Or pay more on the card to which you owe the least, suggested NEFE’s Neiser. That way you’ve paid off a few cards entirely and feel like you’ve made progress. Once a particular card is paid off, keep the account open, but don’t use it and you’ll increase your credit capacity – or the total amount you’ve been offered on credit — long-term.

Meanwhile, pay off and close out the accounts on the credit cards that are the most tempting: Cards from department or electronics stores, which often send out coupons or other promotions, as well as credit cards that give you airline miles or other incentives. Swapping out these niche cards for more traditional credit cards tied to major financial institutions or a consumer credit union may help you spend less.

Be aware that closing out available lines of credit lowers your credit score a little in the short term, because it lowers your credit capacity. But Neiser said it will improve your relationship with money and credit cards in the longer term, improve your spending habits, and ultimately your credit capacity. (Related: Improving your credit score)

The Fair Credit Reporting Act (FCRA) requires the three biggest credit-reporting agencies — Experian, TransUnion, and Equifax — to provide consumers with a free credit report annually. To get yours, visit the central website the three agencies set up at

Avoid those so-called debt consolidation agencies; many are misleading or fraudulent. Instead, seek the help of non-profit credit counselors that can help you cut your debt and create a budget. Try the National Foundation for Credit Counseling.

Or check out the Federal Trade Commission, the country’s consumer protection agency, which offers tips on choosing a credit counselor, coping with debt, and settling credit card debt

How to avoid credit card debt

Planning for bad times and unexpected expenses in the present is a key part of avoiding credit card debt problems in the future.

Experts agree that everyone should have an emergency fund. That way if you get into trouble again, it’s better to cash out that fund than to add to your credit card debt.

But it’s also important to recognize that you will get older and may have health issues down the road. Without preparation, these developments often lead people to turn to their credit cards and subsequently get burdened with overwhelming credit card debt.

If you are part of the full-time workforce, take advantage of your company’s retirement plan if it has one. If it doesn’t or you are a contract or freelance worker, you should set up your own through your bank or by working with a financial professional. (Related: Retirement income calculator)

In addition, you should take advantage of health insurance and disability insurance, either offered through your employer or independently. Sudden medical expenses are a leading cause of personal bankruptcy.3 And, if you are just starting your career, the chances that you will be too ill or injured to work at some time before retirement age are one in four.4

If you have a family or people who depend on you and your financial well-being, life insurance is also something to consider. Aside from the protection life insurance offers, some types also offer a source of funds in the future, albeit with some negative consequences in certain circumstances. Deciding what kind of life insurance is appropriate for you depends on your circumstances. (Learn more here).

Of course, contributing to retirement accounts and paying insurance premiums reduce your immediate available income. But making such moves now may help you handle future expenses that would otherwise push you into a credit card bind.

“The idea is to live a little below your means, not within your means,” Neiser said. “That way you have a margin of safety.”

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This article was originally published March, 2016. It has been updated.


1 Consumer Financial Protection Bureau, “The Consumer Credit Card Market,” September 2021.

2 Nerdwallet, “2021 American Household Credit Card Debt Study,” Jan. 11, 2022.

3 American Journal of Public Health, “Medical Bankruptcy: Still Common Despite the Affordable Care Act,” March 2019.

4 Social Security Administration, “Disability Fact Sheet.”

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The information provided is not written or intended as specific tax or legal advice. MassMutual, its employees and representatives are not authorized to give tax or legal advice. You are encouraged to seek advice from your own tax or legal counsel. Opinions expressed by those interviewed are their own and do not necessarily represent the views of Massachusetts Mutual Life Insurance Company.