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There’s nothing quite like the feeling of having your credit card balance paid in full. It’s like a breath of fresh air, a surge of pride, and a huge sigh of relief all rolled into one. But Americans have an on-going love affair with plastic.

Collectively we hold more than $1 trillion in credit card debt. When it comes to getting rid of credit card debt, baby steps can lead to big victories—even the possibility of getting those credit cards paid off in 2020.

To be clear, we’re not talking about being completely debt-free in 2020. Depending on how much you owe on all your debt in total, that could be a longer journey. But targeting your credit card debt can be a smart first-step since credit card debt can sometimes come with a high interest rate.

We’ve put together eight common strategies for how to get rid of credit card debt. But first, you’ll need to get your head in the game. Unless you suddenly receive an inheritance or win the powerball, unloading debt can be challenging.

If you truly want to try and eliminate credit card debt in the new year, it’s going to require a lot of budgeting, discipline, and will-power. You’ll likely have to make sacrifices and compromises. But if you can keep your eye on the prize, next year you could be looking at a nice, round zero.

1. Limit Your Use of Credit

No strategy for how to crush credit card debt is going to work if you continue to rely heavily on your credit cards. Pick one card to keep—ideally, one with good terms, like a low interest rate or a great rewards program —and put the rest away.

You can store them in a safe place or even cut them up so you’re not tempted to use them. If the card doesn’t carry a large annual fee, consider not canceling your credit card account, since losing that cards credit history or percentage of credit utilization could possibly have an affect on your credit score.

2. Take a Hard Look at Your Spending

Go through last month’s bank and credit card statements and add up all the money you spent eating out, or shopping for non-essentials. You may be surprised at what you find.

Review your spending closely and see if there is any room for you to cut back on unnecessary expenses. Then, create a budget that’s completely within your means.

The goal is to cut back on your discretionary spending so you can focus additional funds on paying off your credit card debt. Take a look at our tips for creating a better budget. Building a workable budget is one of the first steps in tackling your debt.

3. Create a Debt-Repayment Strategy and Stick to It

There are a few different schools of thought when it comes to eliminating your credit card debt, especially if you have debt spread over multiple credit cards. Regardless of the strategy you choose, make the minimum monthly payments on all of your debts.

One strategy is called the debt avalanche method. Using this method you’ll organize your credit card debt from highest interest rate to lowest interest rate.

Focus your efforts on repaying the debt with the highest interest rate first. Then as you pay off each credit card, you can contribute the money you were contributing to the next debt.

On average, Americans will pay more than $1,000 in interest this year, so tackling the highest interest rate first could be appealing. You can use our credit card interest calculator to see an estimate of how much interest you’ll accrue on your current track.

The other approach suggests you focus on the credit card with the smallest balance first. This is called the debt snowball method. The goal of this strategy is to encourage you to continue your debt repayments. Since you start with the smallest balance, you’ll start seeing the impact of your payments faster.

6. Transfer to a Balance Transfer Credit Card

This could help you toward your goal of eliminating your credit card debt but in order to do so it will require diligence to avoid common pitfalls.

A balance transfer credit card allows you to open a new low-interest or interest-free credit card and transfer your existing balance from a high-interest credit card, so you can pay off the debt. In theory, paying off the debt should be easier without a high APR.

The introductory APR on low or 0% transfers generally lasts anywhere from six to 18-months, so be sure you understand the terms and conditions. These can be a useful tool if you can repay your debt during the introductory period.

7. Consolidate Your Debt with a Personal Loan

A personal loan won’t eliminate your debt, but it could help you get out of the high-interest credit card game. Instead of a revolving door of debt, you can opt to pay one monthly fixed payment, possibly at a lower interest rate.

8. Pay More than You Owe, More Often than You Owe It

As you work toward paying your credit card debt, consider making more than the monthly minimum payments. This can help you pay off your debt faster and in doing so, could help you reduce the amount of money you spend in interest over the life of the debt. This can be helpful in both the avalanche and snowball methods of debt repayment.

Ready to see how consolidating your credit card debt with a personal loan could help you take control of your finances? SoFi can help. Use our personal loan calculator to compare your current debts with a personal loan.

When you take out a loan with SoFi there are no prepayment penalties or origination fees. You’ll also gain access to a community of like-minded savers.

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

Debt happens. Sometimes you need to rely on a credit card or loan to meet the demands of life’s expenses. But if you hold a sizable amount of credit card debt, have defaulted on a loan, or have failed to pay an unexpected emergency room bill, it’s important to know what could come next.

To help provide a broad understanding of what might happen if your debt goes into collections, we’re going to take a look at the Fair Debt Collection Practices Act (FDCPA). Look, maybe it’s not the most compelling-sounding document, but a general understanding of the FDCPA could help over the course of your financial life.

It’s important to remember that if you have specific questions about debt collection laws or the FDCPA, it would be best to consult your tax attorney and financial advisor. This article is merely an overview of the debt collection process and should not be taken as advice. We want the following intel to serve as background info—nothing more. With that in mind, here is a closer look at the world of debt collection.

What the FDCPA Doesn’t Cover

If you’re facing serious debt and are being contacted by debt collectors, it’s important to understand your rights. The FDCPA is essentially the Federal Trade Commission’s (FTC) rule book on how debt collectors can interact with consumers. Typically, debt collectors are thoroughly schooled in the ways of FDCPA, because they have to comply with it when collecting on consumer debts. However, the FDCPA does not apply to the following:

•  Creditors (i.e., the lenders you originally took the debt from)

•  Corporate or commercial debts (this means the FDCPA doesn’t apply when a large company defaults on their debt)

•  Business-related debts (even for consumers, the FDCPA does not extend to debts incurred for business expenses)

P.S.: More exceptions might apply here, and for more information, you can consult your tax attorney and review the FDCPA in full.

Now that we’ve got a handle on where the FDCPA doesn’t come into play, let’s look at rules the FDCPA lays out for debt collector-consumer interaction:

Debt Collectors Cannot Harass the Consumer

In accordance with the FDCPA , debt collectors can’t “harass, oppress, or abuse” the consumer in attempts to collect their payment.

Debt Collectors Can Contact You Multiple Ways

Debt collectors can contact you to collect a debt using multiple methods of communication including by phone, mail, email, or even text messages.

They Can Collect for a Number of Outstanding Debts

Consumer debt collectors aren’t limited to collecting for credit card debt. They can also collect for auto loans, medical bills, student loans, mortgages, and other household debts. However, as noted above, they cannot collect for business debts.

They Can Ask Your Friends and Family How to Reach You

While debt collectors cannot discuss your debt with anyone else (with the potential exception of your spouse and your attorney), they can ask others for your address, your home phone number, and where you work. However, collectors can typically only contact them once.

Collectors Must Provide Information in Writing

Once a debt collector has contacted you, they have five days to send you a written notice stating how much money you owe, the name of the creditor you owe it to, and what you can do if you don’t think this debt is yours.

Collectors Must Verify Your Debt

If you are being contacted about debt you don’t believe is yours, the FDCPA notes that you must send the debt collector a letter within 30 days of receiving their letter, clearly communicating that you’re not liable for that money.

The collector then needs to send you written verification of the debt, for example, a copy of a bill for the amount you owe, before the agency can start contacting you to collect the money again.

They Can Take Money from Your Paycheck

A debt collector can obtain a court order for garnishment, directing that your wages or benefits be seized to repay your debt.

They can also seek a court order allowing them to take money from your bank account. It’s important not to ignore any lawsuit filed by a debt collector against you.

They Can’t Call You at All Hours

There are restrictions in place that limit when and where debt collectors can contact you. For instance, they can’t call before 8 a.m. or after 9 p.m. (consumer’s local time), unless you specifically give them permission.

They also can’t call you at work, if you tell them you aren’t allowed to get calls at work.

They Must Stop Contacting You if You Ask

If you send a debt collector a letter by mail, asking them to stop contacting you, then they can only contact you to tell you about a specific action they are taking, such as filing a lawsuit.

If you send a letter stating you’ve hired an attorney to represent you, the collector must communicate with your attorney. However, the FTC recommends you talk with the debt collector at least once to confirm whether they are talking about debt that you actually owe.

They Can’t Lie

Debt collectors can’t lie just to get your attention. Any information a debt collector shares with you must be accurate.

They cannot embellish the amount of money you owe or misrepresent themselves by saying they’re attorneys or government representatives. They also can’t threaten you with a false arrest or legal action.

They Must Abide by Laws

Collectors cannot engage in unfair practices such as trying to collect extra interest or fees beyond what you owe. They cannot deposit a post-dated check early, and they cannot threaten to take your property without obtaining a court order.

If you believe a debt collector has broken a law, you can sue them in state or federal court for damages such as lost wages and medical bills. You can report violations to your state attorney general’s office , the Federal Trade Commission , or the Consumer Financial Protection Bureau .

About SoFi

If you’re reading this, it might be because you’re worried about keeping up with debt payments—whether that’s payments on credit card debt, student loan debt, or another loan. The ideal scenario, of course, is getting that debt under control before it goes into collections. And one way to do that is by tracking your spending and effectively organizing your finances so that you can stay on top of your debt payments.

SoFi Relay is a complimentary product that can help you track your spending, view all of your accounts on one dashboard, and set debt payoff goals. You can leverage SoFi Relay to keep your debt payoff plan on track, such that you’re spending more time crushing your debt and less time worrying about default.

Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
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The information provided is not meant to provide investment or financial advice. Investment decisions should be based on an individual’s specific financial needs, goals and risk profile. SoFi can’t guarantee future financial performance. Advisory services offered through SoFi Wealth, LLC. SoFi Securities, LLC, member FINRA / SIPC . The umbrella term “SoFi Invest” refers to the three investment and trading platforms operated by Social Finance, LLC and its affiliates (described below). Individual customer accounts may be subject to the terms applicable to one or more of the platforms below.

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Asked to picture the typical person struggling with student debt, you’d probably imagine a new-ish college graduate or working professional—maybe someone who’s trying to buy a home or who plans to start a family.

But according to recent college debt statistics , that person might just as likely be a parent or grandparent who’s trying to pay off a home or plan for retirement.

Turns out, student debt isn’t just for kids anymore. Even baby boomers, who are now in their mid-50s to early-70s are pressing pause on their dreams because they’re burdened with loans they haven’t paid off, a loan amount that has reached $16,100 for the typical Parent PLUS borrower .

Yes, millennials had their work cut out for them between high tuition rates and lower wages than they might have expected when they graduate.

But their parents and grandparents could be in it with them—sharing at least part of the financial burden. Even those who never borrowed a dime for their own education may have taken out loans or agreed to co-sign for their kids. Now they’re facing some of the same repayment problems—but with less time to bounce back financially.

Student Debt by Generation

According to the Consumer Financial Protection Bureau (CFPB), the number of consumers age 60 and older with student loan debt quadrupled between 2005 and 2015—from about 700,000 to 2.8 million. And the average amount they owe also dramatically increased—from $12,100 to $23,500.

Although most student loan borrowers are still young adults between the ages of 18 and 39, the CFPB says, older consumers are the fastest-growing age segment of the student loan market. In that same 10-year period, 2005 to 2015, the share of borrowers 60 and older increased from 2.7% to 6.4%.

When surveyed, the vast majority of older borrowers (73%) said their student debt was for a child or grandchild’s education. Twenty-seven percent said their loans were for their own education or for their spouse. And the CFPB estimates that 57% of all co-signers are age 55 and older.

Gen Xers, who are now in their late-30s and early-50s, are in a similar situation—except they often have more of their own student debt as well.

In the mid 1970s, boomers started using a combination of grants and student loans, which boosted college attendance, but cracks began to show as student loan debt skyrocketed. In 1986 , more than one quarter of student borrowers owed over $10,000; adjusting for inflation, that’s equivalent to over $21,000 today.

Now, they’re paying for their kids’ education—by taking out loans or contributing less to their retirement savings. Or both. The CFPB found that borrowers nearing retirement (ages 50 to 59) had a lower median amount in their retirement accounts than consumers without student loan debt.

Though financial advisors repeatedly warn parents not to short themselves while helping their kids, a report by the Association of Young Americans (AYA) and the AARP found student loan debt was holding up retirement savings for around a third of Gen X and boomer respondents.

About a quarter of Gen X parents and a third of boomer parents said college debt prevented or delayed them from buying a home. And about a quarter of Gen Xers and boomers said their debt burden was an obstacle in getting the health care they need.

Some overwhelmed borrowers put at least part of the blame on federal parent PLUS loans, which they say are too easy to get. (Parents with a qualified dependent undergraduate student need only prove they don’t have an “adverse credit history”) On average, parents now borrow nearly $15,880 per year in parent PLUS loans.

In March 2018, Federal Reserve Chairman Jerome Powell said that though he generally supports the idea of a vibrant education loan climate, borrowers need to be informed of the risks they’re taking. “You do stand to see longer-term negative effects on people who can’t pay off their student loans,” he said. “It hurts their credit rating, it impacts the entire half of their economic life.”

In general, a college degree is, of course, a worthwhile investment. The unemployment rate for those age 25 and older with a bachelor’s degree or more education was 2.1% in April 2018.

For workers age 25 and older who graduated from high school but did not attend college, the unemployment rate was 4.3%. And those workers are earning more, on average. According to the Pew Research Center , those ages 25 to 39 with at least a bachelor’s degree have, on average, higher family incomes—the individual’s income plus that of his or her spouse or partner—than those in that age range lacking a bachelor’s degree.

Next Steps Toward Tackling Debt

While policymakers look for broader solutions, borrowers are finding their own. For many, that means getting their payments under control with student loan refinancing.

If you have a good job and have maintained a solid credit history, refinancing your student loans may help in a few ways.

If you can get a lower interest rate, you’ll lower the total amount you’ll pay over time—depending on the loan term you choose, of course. And it can make paying off your debt much easier if you have only one payment to make every month.

If you’re a borrower who proudly supported your child or grandchild through college but ended up with more debt than expected, refinancing may be the answer. And if you’re a new-ish borrower who can’t meet your financial goals because your student loans are eating your income, a different payment plan may help you achieve those milestones. Just keep in mind that if you refinance federal student loans with a private lender, you lose some potential federal benefits, such as income-based repayment plans and forbearance options.

Either way, you don’t have to be stuck. And you don’t have to be a college loan statistic.

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.