Americans' credit card debt passes $1 trillion — here are 3 very doable ways to pay your balance off

U.S. consumer credit card debt has reached a record-high $1.03 trillion, according to the New York Federal Reserve's latest quarterly household debt report released Tuesday. In the second quarter of 2023 alone, credit card balances grew by more than 4 percent, a possible sign that consumers are relying on their cards more than ever to get through a period of relatively high inflation.

But even though credit cards can be helpful tools for building financial security, carrying a balance month to month can quickly become overwhelming and lead to expensive debt and a tarnished credit score. Here are three methods to help you tame those ballooning credit card bills and make being debt-free possible.

Debt consolidation is a good idea if you have a bunch of unpaid credit card balances across a few different cards. Basically, you take out a personal loan that covers a portion of all of your balances and then make monthly payments on that one loan. This helps to streamline your credit card debt into one monthly payment instead of juggling several. The new loan will still charge you interest, but it's usually at a lower rate than what you'd be paying on your different credit cards.

And unlike the variable interest rate charged by credit cards, the interest on your debt consolidation loan is often fixed, giving you the peace of mind of predictability. LightStream is a top debt consolidation loan provider because it offers same-day funding, fixed and low interest rates (plus an autopay discount), a variety of term lengths and it doesn't charge any origination fees, administration fees or early payoff fees. You'll need good or excellent credit to qualify, though.

For those with less-than-stellar or bad credit, consider Upstart, a top personal loan provider that allows applicants with a low credit score or no credit history whatsoever by considering additional factors like education and employment. Upstart also allows you to apply with a co-applicant, so even if you lack a robust credit history you still have the opportunity to receive a lower interest rate. Upstart offers next-day funding and doesn't charge early payoff fees.

A balance transfer credit card is another way to manage your credit card debt. This type of card offers new users an introductory 0% APR period on balances transferred to the card. During this time, you can focus on paying down your debt without having interest charges adding to your burden. The below balance transfer credit cards offer interest-free periods for 21 months — giving you almost two years to work on your debt payoff:

With a balance transfer card, the best way to make the most of its use is to make sure you have a plan in place for how you'll pay off your credit card debt within the interest-free period; otherwise, interest will start accruing after that time is up.

A third option that's more complicated than the other two solutions is to seek help from a debt relief company. These companies negotiate your debt on your behalf. While the debt relief company is negotiating, you stop making payments on your debt and instead place those funds in a savings account to pay the new amount negotiated between the debt relief company and your creditors.

For credit card debt specifically, we recommend Freedom Debt Relief, which has a program guarantee that refunds fees if settlement and fees are greater than the amount originally owed when enrolling in the program.

It's important to keep in mind that debt settlement isn't guaranteed, and it also comes with some potential risks: you can hurt your credit score, end up paying extra fees and/or additional taxes when debts are settled and face possible lawsuits.

Credit card debt can undoubtedly become stress-inducing rather quickly. Because of the high interest rates card issuers usually charge (in addition to late fees), an unpaid balance can quickly balloon into a big problem. Card issuers tend to compound interest daily, too, meaning your interest is added to your principal balance at the end of each day. It saves you money to act now versus later, which is why we recommend either a debt consolidation loan or a balance transfer credit card to make paying off your debt achievable.

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