Dig Out of Debt: Use the snowball strategy or avalanche approach

If you're reeling from your post-holiday credit card bill, you're definitely not alone. According to WalletUp, Americans added $50 billion to their credit card balances last year. Nydia Han decided to put on her cape and give us some help. She is here with how to dig out of that mountain of debt. Hello, Nydia. Are you calling me a superhero? You are. Wow, no question. You're a money hero. I'm going to do my best. Listen, as far as the debt you've already racked up, what's done is done. And since we're only a few weeks into the new year, I do have some great tips to help you hit the restart button. And many of us need these tips. Americans are kicking off 2026 with an average credit card balance of about $6,523. That's according to credit reporting agency TransUnion. And take a look at this. The average credit card interest rate is a staggering 22.83%. So, chipping away at that balance should be your number one resolution. And there are strategies to help you do that. So, the number one thing you want to do is make your payments on time and ideally in full. Make sure you're not missing a bill. I love setting everything up on auto pay so you can just kind of set it and forget it. Set it and forget it. I like that. A missed payment can damage your credit score, which is the building block of your financial life. To get your first apartment, a good mortgage on a house, a lower rate on your car loan, even a better deal on your cell phone bill. The other thing is making sure that you're not using too much of your available credit, really relying on credit or debt each month because that is going to cause your credit score to drop. So, we recommend keeping your usage of the available credit under 30%, ideally under 10%. Also, be strategic about how much you pay and to whom. Start with the snowball strategy where you roll your money out, paying down the cards with the smallest debt first for that instant gratification, quick win, and boost of confidence. Or, you can employ the avalanche approach. Pay off debt with the highest interest first, which can save money on interest payments over time, creating a bigger rush down of your debt. Either way, get out your shovels, guys. We have work to do. You mentioned those high interest rates. And I know even a 1% or 2% difference in an interest rate can really make a big difference. How can people go about trying to even lower their interest rates? Yeah, it can make a really big difference. I mean, first of all, call your credit card company. See if they'll help you out. And even that small rate difference can mean you're paying thousands of dollars more over the lifetime of that debt, especially if you're one of many Americans who's only paying the minimum on their payments. So, that's the other trick. Don't just pay the minimum. Pay at least a little bit more. You'll never get out of it. Yeah, exactly. All right.