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How to Better Manage Your Debt: Credit Card Relief & Other Options

Claire Matthews

Financial Advisor, MoneyBeagle

Managing debt is an important skill. It’s the best way to keep your bills low and to make sure that you can save money to put towards things you enjoy. However, managing debt can be difficult. Many financial products are confusing. It can also be hard to understand exactly what you’ll be paying for different credit and loan products.

That’s why we put together this guide. We’re here to help you understand how to better manage your debt. We’ll help you understand debt management. After that, we’ll cover the debt management options and the two most common debt payoff strategies recommended by top financial experts.

Ways to Better Manage Your Debt

Understanding Debt Management Options

Debt Management Program

There are many different types of debt management programs. That’s why it’s important to talk to several different companies to see which one will work best for you.

Debt management programs usually have a combination of elements. Almost every debt management program you get from a debt relief organization will focus on financial education. They help you understand how different financial products work so that you know what you’re getting into. Take a look at Freedom debt relief reviews for one such company.

Many programs also help you come up with a budget. They’ll ask for information about your income and expenses and help you plan a way to meet all of your bills. Some even help you outline the best way to pay down your debts so that you can start saving when they’re helping with your budget.

Other debt management programs use other financial products to help you manage your debt. The most common ones are a consolidation loan, a balance transfer card, and debt settlement.

Consolidation Loan

A consolidation loan is where you take out one large loan to cover all of your smaller outstanding debts. The consolidation loan should be at a lower interest rate than your current bills. That means more of your payment will go towards the balance. It also means you’ll pay less on your debts over time. A consolidation loan also makes it easier to track your debts and your bills because everything is lumped into one payment. You can learn more about the best debt consolidation loans here on DCL.

Balance Transfer Credit Card

Another option credit card consolidation is a balance transfer credit card. These credit cards have a special feature that allows you to transfer existing balances to them. The cards have zero interest on balance transfers for an introductory period, usually 1 year to 18 months. That lets you pay off your balance at zero percent interest.

Debt Settlement

Finally, some debt management programs incorporate debt settlement. That’s where you negotiate a single large payment on your debts for less than your balance owed. The creditor accepts the payment and marks the debt as paid.

Each of these program elements has their own benefits and disadvantages. Also, each one is better in different circumstances. A debt management program can help you determine the best option.

How to Better Manage Your Debt

Debt Management Payoff Strategies

There are two primary debt payoff strategies that experts recommend. They are debt snowballing and debt avalanche. We’ll cover each of these processes here.

Debt Avalanche

Debt avalanche is best when you’re dealing with multiple credit cards. The way it works is simple. You pick the card with the highest interest rates on it and make extra payments towards that card.

Once that card is paid off, you take the money you were using to pay that card and apply it to the card with the next highest balance. You repeat this process until all of your cards are paid off. Once you get the first card paid off you’ll get the next card paid off even faster. The process continues to accelerate as long as you’re making your payments bigger and bigger.

This strategy also saves you the most money in the long term. That’s because if focuses on the cards with the highest interest rates. That means every time you pay off a card you’re spending less and less on credit.

Debt Snowball

The next option for debt payoff is the debt snowball strategy. This strategy involves picking the lowest balance you have and working on that. Once the smallest balance is paid off, you take the money you were putting towards that bill and use it as an extra payment on the next smallest balance.

This strategy lets you build up larger and larger payments so that your debt disappears faster and faster as you successfully clear your balances.

Picking the Right Debt Payoff Strategy

Both of these options work better in different circumstances. You can use helpful tools like a debt avalanche calculator or a debt repayment calculator to compare how long it will take you to pay off your balances using each method. You can also see how much money you’ll pay overall using each method.

Once you compare the different calculations, you should make a choice that best enhances your goals. If you want to be out of debt as quickly as possible, then chose the fastest option. If you want to spend the least money overall, use the cheapest option. Keep in mind that the fastest and cheapest method could be the same one. It all depends on your unique financial situation.

How to Better Manage Your Debt

General Debt Management FAQ

This is where we answer general questions about debt management. Use these answers to get a solid understanding of debt management so you can move on to more complex debt management issues.

What is the Best Way to Pay Down Debt?

That depends on the way your debt is structured. Debt snowballing and debt avalanche are the two best methods for paying down debt quickly.

How Can I Reduce My Debt Quickly?

It can be hard to pay off debt quickly. Two of the best ways to do so are to focus on the debts with the highest interest rates, or debt snowballing, or the ones with the lowest balances, debt avalanching. These two methods can help you pay off your debt quickly. We talk more about the best way to pay off debt in another article.

What Debt Should I Pay Off First?

That depends on how your debt is structured. If you have a lot of credit card debt, then debt snowballing is better. If you have lots of instalment debt, then the debt avalanche method is preferable.

How Do You Deal With Debts?

There are lots of ways you can deal with debts. You can try negotiating a lower interest rate with your creditor. You can also use the debt snowball and debt avalanche methods to quickly pay off your debts.

How Much Should I Have in My Emergency Fund?

Experts generally recommend that you have at least 2 months worth of expenses in your emergency fund. That will give you enough time to find a job if the worst should happen.

How Can I Lower My Debt Ratio?

The best ways to lower your debt ratio is by using the debt avalanche and debt snowball methods. You can also get a side job or take gig jobs to boost your income.

How Can I Save Money to Pay Off Debt?

The best way to save money to pay off debt is to make and stick to a realistic budget. That ay you can plan your finances so you can correctly allocate money to savings so you can pay off your debts.

What is the Best Way to Manage Debt?

That depends on lots of different factors. A debt management specialist can help you understand the best way to deal with your particular debt situation.

How to Manage Your Bills and Reduce Debt?

A well-planned and honest budget is the best way to manage your bills and reduce your debt. That will allow you to see what you’re brining in and how much you need to cover your bills. Then you can decide how to allocate anything extra to pay debt down.

How Can I Get Out of Debt With No Money?

It’s hard to get out of debt with no money. Your best two options are debt settlement and bankruptcy. These options will allow you to avoid liability for your debt or to pay down your debt for much less than you owe. Another option is to follow the Dave Ramsey baby steps to get out of debt.

How Do I Get Out of a Huge Debt?

The best way to get out of a huge debt is to make extra payments. That will allow you to lower the amount of interest you’re paying on the debt, which will save you money overall.

What are the Warning Signs of Debt Problems?

There are several signs of debt problems. The most telling sign is when you’re unsure if you’re going to be able to pay your bills on time. A careful and honest budget will help you understand if you’re experiencing debt problems.

How Can I Pay Off Debt Wisely?

That depends on your specific debt situation. You can either focus on things with the highest interest rates or you can focus on paying off the debts with the smallest balances first.

How Can I Pay Off Debt Quickly?

Paying debt off quickly is a matter of prioritizing which debts you cover first. Depending on your specific situation, you might want to consider paying off items with higher interest rates, which will save you money long-term, or paying off things with a lower balance, which will lower your bills faster.

How to Manage Debt Ratio?

There are two options for managing your debt ratio. You can either boost your income by taking on additional work, like a side gig or second job. The other option is to pick a debt payoff strategy and stick to it to lower your debts.

How Can I Reduce My Debt Quickly?

The best way to reduce your debt quickly is by using either the debt snowball or debt avalanche methods. Debt snowball works best for credit card debt, whereas debt avalanche works better for installment debt.

How Do I Pay Off Debt if I Live Paycheck to Paycheck?

Paying off debt when you live paycheck to paycheck can be hard. Your best option is to talk to your creditors to see if you can get a payment plan or lower interest rates. You can also try to see if they have any debt settlement options for you.

How to Better Manage Your Debt

Managing Credit Card Debt

Credit card debt is one of the hardest types of debt to manage. It usually has a much higher interest rates than other kinds of debt. Moreover, it’s easy to keep your balance high if you continue to use your card while you’re trying to pay it off. This section answers the questions you have about how to manage credit card debt.

How Do I Pay Off Multiple Credit Cards?

Most experts recommend the debt snowball method to pay off multiple credit cards. Focus extra payments on the cards with the highest interest rates. Once the first card is paid off you put the payment you were making on that card towards the next highest interest rate.

What's the Best Way to Pay Off Credit Card Debt?

The debt snowball payoff strategy is the best way to pay off credit cards. It will also save you the most money long term. Focus on the card with the highest interest rate and pay it off, then repeat the process.

How Do I Get out of Credit Card Debt Without Ruining My Credit?

A debt consolidation loan is a great way to get out of debt without ruining your credit. You’ll be able to get lower interest rates on your debt. You’ll also convert credit card debt to installment debt, which can boost your credit score.

How Can I Pay Off My Credit Card Faster?

Making extra payments is the best way to pay off your credit card faster. You can also try to get a balance transfer card. Just be sure to pay the balance off before the introductory interest period is over or you’ll get hit with deferred interest.

How Can I Reduce My Credit Card Debt?

There are several options to reduce your credit card debt. You can get a balance transfer card with zero interest. You can also use a consolidation loan to lower your monthly payments while also paying off your debt faster.

How Can I Get Rid of Credit Card Debt Legally?

A consolidation loan is the best way to get rid of credit card debt legally. It will give you a lower interest rate so more of your payment will go toward your balance. You can also use a balance transfer card to quickly pay off your debt. Read more: What is the best way to consolidate credit card debt?

Is it Good to Pay Credit Card Off in Full?

Yes. It’s always good to pay off your credit card in full. Carrying a balance will hurt your credit score and cause you to start paying lots of money on interest charges. Paying off your credit cards will boost your score and save you money.

How to Manage Credit Card Debt?

You have a few options to manage credit card debts. You can use the debt snowball strategy to pay the debts off. You can also use a balance transfer card or a consolidation loan to help you eliminate your credit card balance at a low or zero interest rate.

Managing Debt and Credit Scores

One of the biggest impacts of debt is on credit scores. Therefore, it’s no surprise that so many people have questions about how debt management can impact their credit. This section will help you understand how different aspects of debt management will impact your credit score.

Can Paying Off Collections Raise Your Credit Score?

Not usually. However, it can still help your chances of getting approved for a loan or line of credit. Lenders are much more likely to approve you if they see you responsibly took care of your past due obligations.

How Long Does It Take for Your Credit Score to Go Up After Paying Off a Credit Card?

It depends on lots of different factors. Credit scores are a very complex process. Generally you’ll see your score go up after your next statement comes out, as that is when your credit card company reports to the credit reporting agencies.

How to Manage Debt With Bad Credit?

It can be difficult to manage debt with bad credit. However, you might still be able to get approved for unsecured debt consolidation loans bad credit or not. You can also try to negotiate with your creditors for lower interest rates or payments.

How to Manage Debt to Improve Credit Score?

The best way to manage your debt to improve your credit score is by focusing on paying off credit cards. The amount of your credit that you’re using makes up 30% of your overall credit score. That means lowering your credit card balances will have an fast effect on your credit.

How to Better Manage Your Debt

Managing Different Kinds of Debt

There are lots of different kinds of debt other than credit cards. That means people have lots of questions about how to manage these different kinds of debts. This section will answer the questions you have about how to manage non-credit card debts. Use this information to make better decisions about where to put your money to become debt free.

How to Manage College Debt?

Managing college debt is difficult. In fact, student loan debt is the 2nd biggest source of consumer debt in the country. Student Consolidation loans are a good way to lower your interest rates so you can pay off your college debt faster.

How to Manage Student Loan Debt?

There are lots of different federal repayment programs that you can use to manage your student loan debt. You’ll need to talk to your student loan servicer to see which repayment programs are available to you.

How to Manage Debt Collectors?

Debt collectors are notoriously hard to deal with. The best way to manage them is to work out a payment program. You can also use a consolidation loan that includes your charged off balances in collections to get debt collectors off your back.

How to Manage Debt and Spending Habit?

The best way to manage debt and spending habits is to make an honest and well-planned budget. You should make sure to account for all of your expenses. Then you need to stick to the budget you set.

How to Manage Your Personal Debt?

A debt management company can help you understand how to manage your personal debt. Debt consolidation loans are a good option to make your payments easier to track while also paying off your debt faster.

How to Manage Debt in Business?

Business debt is a slightly different beast than personal debt. Businesses have a lot more options when it comes to access to capital. Try for a business loan, factor your invoices, or look for ways to lower your expenses.

How to Manage Bad Debt on Loans?

Managing bad debt on loans can be a real headache. The best solution is to see if your collector will accept a payment plan or a debt settlement to lower your balance.

How to Manage Finances and Get Out of Debt?

Setting a clear and realistic budget is the best way to manage your finances to get out of debt. A budget will let you plan how you spend your money, so you can determine which bills you can pay off first.

How to Manage Overwhelming Debt?

Overwhelming debt can be very stressful. A debt consolidation loan is a great option. It can lower the interest you pay on your debt and lower your monthly payments. It will also help you pay off your debts faster.

How to Manage Debt Recovery?

Your debt management company will have the best information on how to manage your specific debt recovery. Most people simply need to follow the program that their debt experts have outlined.

How to Manage Medical Debt?

Most hospitals and doctors are happy to work out a payment program for your medical debt. You’ll need to talk to their billing office to see what kind of options they’ll offer you.

Other Debt Management Questions

There are a few other debt management questions that people have which don’t fall into our other categories. We’ll answer those questions here. This is the place to look if you don’t see your question in any of the other sections.

How Can I Save Money and Pay Off Debt Fast?

Working a second job or picking up a side gig are two great ways to pay save money and to pay off debt quickly. You’ll want to carefully budget so you know where all of your money is going to.

How Do I Pay Off My Snowball Debt?

You pay off debt using the snowball method by focusing on the bills with the highest interest rates. Once the first bill is paid off, you take the money you were using for that payment and apply it to the bill with the next highest interest rates.

What Debts Cannot be Discharged in Chapter 7?

Debts that are the result of judgements against you for causing injury or death, tax liens, alimony, child support, and student loans cannot be discharged in Chapter 7 Bankruptcy. Read more about bankruptcy vs consolidation.

What Consumer Credit Counseling Services are Available?

There are lots of consumer credit counseling services available. You’ll want to check with the agencies in your area to get an accurate idea of what specific services they offer.

Is it Better to Pay Off Debt or Save Money?

That depends on lots of different factors. If paying off the debt will save you money on interest rates, then paying off debt is better. However, if saving money will result in better long-term savings, then that’s the best option.

How to Manage Debt Stress?

Debt stress can be a troubling situation to deal with. Any way that people deal with general anxiety can be helpful to deal with debt stress. Another helpful recommendation is to make a budget you can stick to so you can control your debt.

Can I Manage My Own Debt Management Plan?

It depends. You’ll need to talk with the agency or relevant authority that is in charge of your debt management plan. Oftentimes people do not manage their own debt management plan.

Who Can Help Me Manage My Debt?

Debt relief and credit repair agencies can help you manage your debt. You can also get help from consolidation lenders who will lower your interest rates and let you pay off your debt faster. Read more: What is national debt relief?

How to Manage Payday Loan Debt?

Payday loan debt can accrue interest incredibly quickly. A consolidation loan can help you pay off your payday loan debt while securing a much lower interest rate. That means you’ll pay much less overall.

What Steps are Necessary to Successfully Manage Debt?

The most important step when it comes to managing debt is to make a realistic budget that you stick to. That will allow you to properly allocate your finances so you can start to pay off your det quickly.

Do Local Credit Unions Help You Manage Debt?

Sometimes. Different credit unions have different services available to members. You’ll need to check with your local credit union to get more information about what they can do for you.

Claire Matthews

Claire Matthews

Financial Advisor, MoneyBeagle

Claire is a noted financial writer and author of hundreds of articles about personal and business finance. Before getting her MBA, she graduated with a BS in Economics. Her coursework focused on the different ways that debt, debt structure, and debt restructuring affect micro and macro-economic issues.

Upon graduation, she took a job at an investment bank that worked with municipal and county governments to help them reorganize and structure their debt so they could continue to provide essential city services.

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