FORT MYERS, Fla. — Half of all Americans are walking around with some form of credit card debt. With the average interest rate in the U.S. at 21%, that debt can quickly feel impossible to pay back — but financial experts say there are ways to break free.
Watch senior reporter Emily Young learn how to manage credit card debt:
Christie from Cape Coral found herself in this situation after collecting $30,000 in credit card debt.
"It was little by little, it kept adding up. I couldn't pay it off that month so I said I'll do it next month, I'll do it next month, I'll do it next month and then [whistles] I looked down and was like woah," Christie said.
When I asked her how long it would take to pay off her debt making minimum payments, the reality was shocking.
"If I was just paying the minimum balance, it was like 20 something years. It was ridiculous," Christie said.
While Christie's debt is significantly higher than the national average of $7,000 per person, financial educator Thomas Nitzsche said numbers like hers are actually pretty common. Many of his clients have even had to get a second job to manage their debt.
Some people are making even more drastic life changes.
"We see people coming out of retirement to start paying back some of these bills pretty regularly," Nitzsche said.
Christie sought Nitzsche's help to develop a plan to tackle her debt.
"Depending on the type of debt it is and the status of the debt, there's different options available to you. So, for example if you have $35,000 of debt and you haven't paid on it for months and months and it's all in collections, you may very well be a good candidate for a settlement," Nitzsche said.
When debt has already been sold to a collection agency and credit has already been damaged, the goal becomes resolving it before creditors take legal action or garnish wages.
But for people like Christie who are making minimum payments each month, Nitzsche recommends contacting creditors directly.
"It's better to work with the creditors in what's called a financial hardship program, or with us in a debt management program, where we work with all the creditors to lower the interest rate, consolidate the payments into one, and on average they reduce the interest rates to about 7%," Nitzsche said.
Nitzsche said just this one change can make all the difference.
Since following this advice, Christie has paid down more than half her debt and can finally see the light at the end of the tunnel. She also took the precaution of cutting up all her credit cards.
"It's almost like freedom I guess I'll say," Christie said.
One barrier to seeking help is the stigma associated with credit card debt. A study by Market Watch showed 68% of people would rather talk about their weight than discuss their financial situation. This stigma explains why Christie preferred not to share her last name.
However, experts agree that being open about debt, reaching out for help, and communicating with creditors are key steps toward financial freedom.
