3 Proven Ways to Reduce Credit Card Debt
The average credit card interest rate is 27.89% APR1. That’s high. It’s expensive to pay off revolving debt at that rate, and it takes a long time. Since the average American household in January 2024 had $6,295 of credit card debt2, we wanted to share some of the best ways to reduce it — because a debt-free life is way less stressful.
Ask Your Card Issuer for a Lower Rate
Sometimes all you have to do is ask. If you have good credit and you’re a reliable, long-term customer, you may qualify for a card with better rates, potentially saving you hundreds of dollars. You could even see if your issuer would match a lower rate you’ve been offered somewhere else. All it takes is one phone call.
How Much it Could Save You: A few hundred dollars
Transfer Your Balance to a New Card
If you have good credit, you could qualify for a low- or no-interest balance transfer. That means you could move your high-interest balance to a new credit card that charges a lower interest rate. Saving on interest would help you pay off your debt faster. With this method, it’s best to avoid making purchases on the new card — it only makes paying off the balance more difficult. You also have to watch out for transfer fees, and be aware that the low- or no-interest rate options will likely change to a standardized rate within 6-12 months.
How Much it Could Save You: $2,094.47
| Amount of Debt | Rate | Time to Pay Off | Total Interest Paid | |
|---|---|---|---|---|
| National Average | $6,295 | 27.89% APR1 | 60 months | $5,439.95 |
| Average Low Interest | $6,295 | 18.24% APR Connexus Platinum Card (example rate) | 60 months | $3,345.48 |
Pay Off the Balance with a Personal Loan
To get an even lower rate, with lower monthly payments, and an earlier pay off time, you can use a personal loan. You get the money you need from the loan, pay off your high-interest credit card balance, and then make payments on your low-interest loan instead. This could save you A LOT.
How Much it Could Save You: $2,802.89
| Amount of Debt | Rate | Time to Pay Off | Total Interest Paid | |
|---|---|---|---|---|
| National Average | $6,295 | 20.51% APR3 | 60 months | $3,819.22 |
| Average Low Interest | $6,295 | 11.49% APR4 Connexus Unsecured Personal Loan | 60 months | $1,016.33 |
Whatever method you choose, the best method will always be to control credit card spending to avoid more debt. As you know, that’s not always an option. If your credit card balance is piling up, a Personal Loan is a good option. For more information, you can check out this article “Is a Personal Loan Right for Me?” or learn more about our Connexus Personal Loans.
Disclosures
1 APR = Annual Percentage Rate. The national average credit card rate was 27.89% APR in April 2024 according to Forbes Advisor. Total interest paid based on monthly payments of 3% of the $6,295 balance.
2 Average credit card debt numbers based on “Average Credit Card Debt Study 2024” – Forbes Advisor.
3 Average personal loan rate on loans with a five-year term is 20.51% APR – Forbes Advisor
4 APR = Annual Percentage Rate. Unsecured rates range from 9.99% APR to 18.49% APR and are effective as of 11/21/2024. Rates are subject to change. Rates include a 1% discount when registered for Digital Banking and subscribed to eStatements, and a 1% discount for auto-paying electronically. Minimum loan amount is $1,000. Maximum loan amount is $50,000. Individual rates and terms may vary based on application information, credit history, and selected loan term and amount and include all eligible discounts. Only the most creditworthy applicants qualify for the lowest rates and longest loan terms. Certain restrictions may apply. Not valid on tuition expenses and interest is not tax deductible. Loans currently financed with Connexus Credit Union are not eligible.