If you feel stressed about credit card debt, you are not alone. According to a survey from the National Endowment for Financial Education, nearly 42% of Americans have increased their credit card debt since the start of the COVID-19 pandemic. Moreover, over 21% of Americans currently feel "significantly stressed" about their credit card balances.

While debt sometimes unavoidable, maintaining high balances on a credit card can increase personal financial burdens. Foremost, carrying credit card debt means accruing interest that makes the debt more expensive to pay off in the long run. Second, having a high credit card balance can harm your credit score by raising your credit utilization ratio. This ratio is an assessment of how much credit you are using all at once, and it lets creditors know whether you can afford to take on additional debt. If your credit score is too low, you might have a harder time borrowing money when the need arises in the future.

Fortunately, having a credit card balance does not mean that you need to throw in the towel. With a few adjustments, you can pay down the debt more efficiently and make a fresh start in the upcoming year. A look at the top three tips for paying off credit card debt can help bring money problems under control.
 

Cut Costs by Tackling the Highest Interest Debt First

If you owe money on several credit cards and loans, it may feel tempting to pay off small amounts first before moving on the debt with the highest balance. However, it is actually more cost-efficient to focus on debt with the highest interest rate first. Debts with high interest rates accrue more fees the longer you leave those debts unpaid. By paying it down sooner, you can reduce your overall bill.

The importance of paying off high-interest cards also becomes apparent within the strategy of creating "zero balance" accounts for your credit record. Some people erroneously believe that they should close or cancel high-interest cards to avoid debt. Unfortunately, closing credit cards can have a negative impact on your credit score. But if you pay off the high-interest card so that your monthly credit report shows the balance owed as "zero," this method demonstrates that you have the ability to pay your debts in full. This proven ability can have a very positive impact on your credit score, making yourself an attractive candidate if you need to borrow money in the future.
 

Consolidate Debt Using a Balance Transfer

If your credit score is in decent shape, you may also qualify for a balance transfer. This means moving your existing credit card debt onto a new card with a much lower interest rate. The lowered interest rate results in reduced fees that you can pay off faster. Some balance transfer programs even offer a period of 0% interest rates that can range from 18 months to two years. Shop around to find the best balance transfer card with the longest 0% interest period. Once you have read the fine print and agreed to the terms, try making automatic payments so that you can take advantage of the 0% interest as much as possible.
 

Consider Redirecting Debt Toward a Personal Loan Instead

Some individuals have found success with balancing their finances using a personal loan. Like a balance transfer card, personal loans tend to have much lower rates than high-interest credit cards. Think of a personal loan as debt consolidation. Since this type of loan allows you to borrow money for any reason, you can take one out for the sole purpose of paying off your credit card balance in full. This method creates a monthly "zero balance" for the credit card that can have a positive impact on your score. From there, you can then repay the personal loan over time. And by making monthly loan payments on time, you can demonstrate that you are responsible with money and further improve your credit score.

Racking up debt can create undeniable stress. In particular, high-interest credit card debt can create a snowball effect that compounds any preexisting financial pressure. Fortunately, there are ways to mitigate these bills. With the right consolidation strategy, you can lower your interest and make the debt more manageable.