42% of U.S. Adults Are Carrying Credit Card Debt. Here's How to Shed Yours as Quickly as Possible

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  • Credit card debt can cause credit score damage and cost you a lot of money in interest.
  • You'll need to boost your income or reduce your spending to make a dent in your debt.
  • The more of an effort you make, the more money you might save.

It's worth getting rid of that debt as soon as you can.

It's not so uncommon for U.S. consumers to land in debt, whether via financing the purchase of a home, a car, or something else. New York Life’s latest Wealth Watch survey reveals that 70% of U.S. adults have some sort of debt. But 42% have debt of the credit card variety, which isn't great.

The problem with credit card debt

There are two key reasons why credit card debt is a point of concern. First of all, credit cards are notorious for charging high interest rates. And credit card interest commonly compounds daily. What this means is that for each day you continue to carry your balance forward, you rack up additional interest not just on your principal balance, but the interest on it as well.

Furthermore, too much credit card debt can damage your credit score. That's because your credit utilization ratio plays a big role in calculating that number.

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Your credit utilization ratio measures how much of your available revolving credit you're using at once. If that ratio is over the 30% mark, you may incur credit score damage. So while a smaller credit card balance may not cause much or any damage to your credit score, a larger balance relative to your total spending limit could.

How to shed credit card debt quickly

Paying off your credit cards quickly could save you a lot of money on interest. It could also help bring your credit score back up if your existing debt has caused it to drop.

One option in this regard is to take a serious look at your spending and come to terms with making some cutbacks until your balance is whittled down. It wouldn't be reasonable to tell yourself that you'll never spend money on things like restaurant meals or social outings again. But let's say you have a $1,500 credit card balance and you normally spend $250 a month on nonessential purchases. If you were to stop spending that for just six months, you could be debt-free. And once you've gotten there, you can go right back to spending on the things you enjoy.

Another good way to get rid of your credit card debt? Pick up a side hustle. If you give your income a nice boost, you may not have to cut back on spending as much. And you might pay your debt off even sooner if you're able to drum up a few extra hundred dollars a month and apply it to your balances.

The great thing about working a side hustle is that many of these gigs are quite flexible. You may not have to commit to a preset schedule or even leave the house if you take on a second job.

Owing money on credit cards is really far from ideal. If that's the boat you're in, the sooner you pay off your credit card debt, the less money you stand to waste on interest, and the better it might serve your credit score. And if you're planning to apply for a larger loan at any point in the near future, that's a very important thing.

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