According to a recent report, 52% of adults between 50 and 64 have credit card debt, along with 42% of those 65 to 74.
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My husband and I are retired and have accumulated a lot of credit card debt over the past few years. We need help paying it off; what can you tell us?
Credit card debt is a growing concern for millions of older Americans. According to a recent report, 52% of adults between 50 and 64 have credit card debt, along with 42% of those 65 to 74. Among older adults carrying a balance, approximately one-half owe $5,000 or more while nearly one-third owe $10,000.
Rising costs of basic expenses like food, housing, utilities and health care are the reasons behind the prevalence of credit card debt among older Americans. New tariffs on products made in China and other foreign countries are expected to also make many goods more expensive, which could cause more debt. While paying off credit card debt can feel overwhelming in this economic environment, it is possible if you have a plan. Here are some strategies to help you handle it.
Create a Budget Start by taking a close look at your income and expenses to see where you can free up money to put toward your credit card debt. Look for areas to reduce spending, such as dining out, entertainment or subscriptions. It is worth checking whether you are eligible for financial assistance programs that can help boost your budget by paying for necessities like food, utilities, medicine and health care.
Call the Card Company While the average credit card interest rate is more than 20%, some credit card companies may be willing to lower your interest rate or work out a payment plan, especially if you are struggling. Contact the company to negotiate a lower rate and ask about what options are available.
Pay More Than the Minimum Credit card companies only require the minimum payment, but it is usually mostly interest. Whenever possible, aim to pay more than the minimum every month to lower the principal balance.
Choose a Repayment Strategy If you have more than one credit card, pick one and work toward paying it down while continuing to make at least the minimum payments on the others to avoid fees or damage to your credit. Start with the card that carries the highest interest rate or the one with the smallest balance. If you focus on paying off the card with the highest interest rate first, you will pay less interest over time, saving yourself money. Once that card is paid off, move to the next-highest, and so on. Alternatively, you may want to start with the card with the smallest balance. Paying off smaller debts quickly can give you a sense of accomplishment and motivate you to keep going.
Consolidate Your Debt If you have multiple high-interest cards, investigate consolidating your debt with a low-interest personal loan from your bank or credit union. You could also transfer your debts to a credit card with 0% interest for an introductory period, usually between 15 and 21 months. This will temporarily eliminate the amount of interest you are paying. Once the introductory promotion ends, the card company will charge interest on any remaining balance.
Consider a Debt Management Plan If you need more help, use a reputable nonprofit credit-counseling agency to create a debt management plan. A counselor will go over your income and debts and determine what is workable. The counselor will then negotiate with your lenders to get a payment plan that will lower your interest and monthly payments and possibly forgive some debt. If you accept their negotiated offer, you will start making one monthly payment to the counseling service, which will in turn pay the issuers. You may be charged a small fee and have to surrender the cards included in the plan, but your debt could be paid off more quickly.
“Savvy Living” is written by Jim Miller, a regular contributor to NBC’s “Today Show.” The column, and others like it, is available to read via The American Legion’s Fund Development program, a way of establishing your legacy of support for the organization while providing for your current financial needs. Consider naming The American Legion in your will or trust as a part of your personal legacy. Learn more about the process, and the variety of charitable programs you can benefit, at legion.org/plannedgiving. Clicking on “Learn more” will bring up an “E-newsletter” button, where you can sign up for regular information.
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