Top 5 Ways to Restructure and Repay Your Credit Card Debt Quickly

Americans are fond of using credit cards to pay for all sorts of bills. That’s fine because using a credit card is something common and could offer benefits such as building a good credit score and credit history. As a matter of fact, most Americans have two or more credit cards issued by banks or other financial institutions.

Unfortunately, credit card delinquency, or default of payment for 30 days or more from the repayment debt is surging across the US. By the second quarter of 2024, credit card delinquency stood at 3.25 percent, indicating a rise over the 2.77 percent during the same period in 2023. This default or delinquency is linked to soaring cost of living across all the 50 American states.

As you would know, defaulting on credit card repayments can result in several problems. For one, the issuing bank or financial institution will levy late repayment fees and add interest. Additionally, frequent defaults and late repayments can seriously damage your credit score and sometimes, render you ineligible for future loans.

There’re several reasons for people in the US to default on credit card repayments. We will discuss these in this article. Should you be one of the persons plagued with high credit card bills, continue reading. In this article, I will also be discussing top 10 ways to restructure and repay your credit card debt without much trouble or losses.

Let’s begin by understanding the credit card holding patterns in USA.

Credit Card Statistics in USA

According to latest statistics, by late-2024, some 550 million credit cards were actively being used across the US with majority issued by US banks and credit unions, among other organizations.  This figure represents some 77 percent of the total eligible adult US population hold at least two credit cards.

Most Americans have three to four credit cards at the same time while a few holds as many as nine such credit cards from different banks and financial organizations.

In 2024, it's estimated that around 183.9 million American adults, or 70% of the population, hold a credit card. The number of credit card accounts continues to rise, with Super-Prime borrowers or those with high credit scores having around 215 million accounts. Sub-Prime accounts lower credit scores are also increasing, reaching about 100 million in 2024, and counting.

Credit Card Debt in USA

As of 2024, the average credit card debt per person in the US stands at approximately $6,864. This figure reflects balances from both bank and retail credit cards. The debt levels have been increasing steadily, driven in part by rising interest rates, which now average around 21.76 percent for all credit cards and can reach up to 23.37 percent for those accruing interest​.

Different factors, such as income, spending habits, and regional differences, also influence credit card debt.

For example, New Jersey has the highest average credit card debt at $8,909, while Mississippi carries one of the lowest at $4,956.  As of October 2024, the average credit card debt for consumers in various states stood differently.

Wisconsin accounted for the one of the lowest credit card debts with average $4,940 per person while Alaska has $7,430 per person. Credit card debts across some other states indicate varying spending habits. For example, credit card holders in Colorado have an average $6,108 in dues while those in Montana have $5,728 while Americans in Wisconsin owe only $4,940- one of the lowest in USA. Card holders in Virginia owe average $6,477, according to latest statistics.

As you can see, credit card debt varies according to your location. While you might have lower credit card debt than the national or state average, some other could have as high as $10,000 or even more in unpaid credit card bills. Regardless whether you owe $20 or $200,000, a credit card issuer will report delinquency to credit bureaux and could initiate action to collect the due amounts.

Thankfully, there’re 10 superb ways to avoid the imminent evils that could befall, should you default or miss repayments on credit card bills. That’s exactly what I would be discussing in this article. Therefore, continue reading till the end.

Consequences of Credit Card Delinquency

Believe me, I’m not describing these 10 undesirable consequences of defaulting on credit card repayments to create panic or worry. Instead, I am discussing them for you to be aware about the various problems you could face by leaving credit card debt unpaid and their far-reaching consequences on your life, as a consumer and citizen.

These would also highlight the reasons to get your credit card debt restructured where necessary or paid in full, if possible.

1-  Poor Credit Score

The best credit score you could have is at 850 on VantageScore and Fair Isaacs Corporation or FICO, in USA. However, most Americans have an average credit score of 716 on VantageScore or FICO, which is considered good and held by persons above the age of 40 years. Younger folks have an average credit score of 679, which is average. A credit score of 580 to 669 is considered as fair while anything between 300 and 579 is considered as a poor credit score.

2-  High Interest Rates and Fees

When you miss payments on credit cards, the issuer will add late fees and interest. In some cases, the penal interest could skyrocket to a whopping 29 percent, making your purchases dearer than their cost price. Added to that is the burden of late fees, which the issuer will add even if you miss a single, small repayment on credit card bills.

3-  Debt Collection Calls

Should you delay repayment of a credit card bill for 90 to 180 days, the issuer could “sell” your loan to collection agencies to recover the money. This invariably leads to incessant and irritating calls from recovery agents. These recovery agents will use all phone numbers listed on your name, which could include residential phone and office phone too as well as mobiles. Though such recovery agents have to operate under strict the Fair Debt Collection Practices Act (FDCPA), these calls can distract you from tasks at workplace and home. Most debt collectors aren’t allowed to call at your workplace due to the FDCPA, but that’s little protection.

4-  Legal Consequences

Credit card delinquency also attracts legal consequences, regardless of the amount. This could result in wage garnishment or a system where the bank withholds a part of your income to repay the credit card issuer or creditor and you get only the remainder of your earnings.  This directly translates as having lesser money to spend on your needs and those of the household. The amounts of wages garnished could include late repayment fees, legal costs as well as higher interest, though these are decided by law in all cases sans exceptions.

5-  Difficulties in Getting Future Credit

Defaulting on credit card repayments or delays can seriously send your credit scores spiralling downwards, as I mention earlier. The lower your credit score, the more difficulties you’ll encounter in getting loans and mortgages, vehicle finance and other debt. Generally, all credit card companies report a missed payment or non-payment of as low as $10 to a credit ratings bureau. This credit score is accessible by lenders and hence, they might deny you future credit or charge very high interests to cover any anticipated losses in the event of a default.

6-  Employment Background Screening

In certain cases, you could miss out on a dream job due to unpaid credit card debt. This happens because your credit history remains in databases for about 10 years. Lots of employers across the US check credit history of jobseekers as part of employee background screening. This can be applied at random too. Research indicates that poor credit scores could render you ineligible for Federal jobs, those in banking, finance and insurance sectors, real estate, sales and marketing as well as senior, managerial positions. In brief, it means that unpaid credit card debt can ruin your career.

Impact of Unpaid Credit Card Bills on Health

Unpaid credit card debts combined with calls from recovery agents or even lawsuits and other issues could adversely impact both, your physical and mental health. That’s because credit card delinquency and its evil effects cause severe financial problems. Unpaid credit card dues can significantly impact both physical and mental health in various ways:

1-  Mental Health Effects

• Anxiety and Stress: The worry associated with unpaid debts can lead to chronic anxiety and stress. Financial burdens often create a constant state of worry, contributing to mood disorders.
• Depression: Individuals facing significant financial difficulties are at a higher risk for depression. The overwhelming nature of debt can lead to feelings of hopelessness and despair.
• Social Isolation: The stigma surrounding debt can cause individuals to withdraw from social interactions, increasing feelings of loneliness and depression.

2-  Physical Health Effects

• Sleep Disorders: Financial stress can interfere with sleep quality, leading to insomnia or disrupted sleep patterns. Poor sleep can worsen mental health and lead to various physical health issues.
• Cardiovascular Problems: Chronic stress related to financial issues has been linked to hypertension and other cardiovascular conditions. Stress can have detrimental effects on heart health.
• Substance Abuse: Some individuals may resort to alcohol or drug use as a coping mechanism for the stress of unpaid debts, leading to addiction and further health complications.

3-  Behavioral Changes

• Neglecting Health: Those struggling with debt may avoid seeking medical care or purchasing necessary medications due to financial constraints, resulting in worsening health conditions.
• Unhealthy Coping Mechanisms: Stress and anxiety can lead to unhealthy lifestyle choices, such as overeating or lack of physical activity, which contribute to obesity and related health problems.

The implications of unpaid credit card dues extend beyond financial strain, affecting overall well-being. These usually have a cascade effect and could affect your family members such as spouse and kids too. The American Association for Marriage and Family Therapy lists evil effects on mental and physical health as one of the leading causes for divorces in USA.

Unpaid Credit Card Debt and Family

The stress of unpaid credit card debts can create tension in relationships, leading to disagreements and resentment. Unmanaged debt can lead to a breakdown in communication between partners. When one partner feels overwhelmed by debt, it can lead to secrecy, shame, or blame. Poor communication regarding finances can create a rift, making it difficult for couples to work together.

Unpaid credit card debt can alter a couple’s lifestyle significantly. Financial constraints may limit spending on essential activities, like vacations or dining out, which can create dissatisfaction in the relationship. This dissatisfaction can exacerbate existing issues and contribute to a decision to divorce. While unpaid credit card debt is not the sole cause of divorce, it is a significant factor that can contribute to relationship breakdowns.

10 Best Ways to Eliminate Credit Card Debt

Hopefully, the information that I’ve given so far would encourage you to restructure and repay your credit card debt quickly. As you would have surely read, eliminating credit card debt can stave a lot of problems. Additionally, wiping off credit card debt with timely repayments could actually lead to greater savings, paving the path towards your financial freedom.

While owning and using a credit card is good enough and commonplace in the US, defaulting or delaying repayments could land you in serious issues. Hence, use one or more of these ways to restructure and repay your credit card debts quickly.

1-  Avalanche Method

If you’ve never heard of an Avalanche, here’s what it means: An Avalanche is rapid, downwards movement of wet snow from a hill or mountain, sometimes reaching speeds of over 100 miles an hour. The Avalanche method of repaying and wiping off credit card dues does exactly the same.

In the Avalanche method, you select the credit card that has the highest amount in unpaid dues and start funneling extra cash till it reaches the magical, zero mark. That’s easier said than done. To use the Avalanche method, you’ll have to curb spending and save some money to make those additional repayments. This could also involve reducing spends on other credit cards.

Using the Avalanche method, you could be rid of a large credit card debt within a few months. In some cases, you can minimize repayments on any other credit cards with lower debt. However, remember to repay the low-debt credit card too and avoid default.

2-  Snowball Method

The snowball method is especially useful if you’re holding multiple credit cards at the same time and have dues on each. The Snowball method works exactly the opposite of the Avalanche. To use the Snowball method, find the credit card where you have the lowest debt and repay that as quickly as possible, even if it means taking away some money from your weekly or monthly expenses.

Once you’ve repaid all on the credit card with the lowest dues, move to the next and repay. Continue doing so till you’re free of debt from most credit cards. And finally, tackle the credit card with the highest dues by pouring in money that’s now remaining after wiping off smaller dues on others. Remember, the last to tackle is the one where you spend the most. Don’t spend on other credit cards till you’ve wiped off all debt on ones with large debt.

3-  Debt Consolidation Loan

To utilize this technique, you’ll need a superb credit score. That’s because you’ll have to take a personal loan and repay dues on all credit cards. To do so, ensure that the loan you get from a bank, credit union or any other lender comes at a rate that’s fairly lower than the Annual Percentage Rate of your credit cards. Generally, a personal loan interest and duration are fixed and there’re no variations.

By repaying all credit card dues using a debt consolidation method, you would have to repay only the monthly instalments for the loan. This can prove fairly easy since you don’t have to worry about multiple credit card dues and rising APRs. Since loan interests are fixed and agreed upon in advance, you could also save a lot of money that credit card dues would have otherwise eaten.

4-  Balance Transfer Credit Cards

Balance Transfer Credit Cards are available from select banks and other lenders in the US. As the term suggests, you can transfer dues from other credit cards to a single one. However, check the interest rates and transfer charges that can vary between three and five percent of the transferred amount. Also, look for special promos from banks and credit unions offering such cards at low APRs. Try to find low APR credit cards, though you might have to miss on some perks available on regular versions.

This method works somewhat like Debt Consolidation Loan. Instead of a loan, all dues on your credit cards are now payable on a single one. You can pay the minimum dues at the end of each billing cycle on this single credit card instead of worrying about multiple bills with multiple and complex APRs. If possible, repay as much as possible since you would be saving on the APRs that would otherwise have gone on multiple credit cards. This method helps you gain control of finances and stops leakage of money on APRs and other dues.

5-  Negotiate with Creditors

If the above steps aren’t possible for any reason, the last one is to negotiate with creditors, meaning the banks or credit unions or financial organizations that’ve issued your credit cards. This could prove time consuming and for a few, even embarrassing. However, mustering enough courage and taking time to improve your financial health is of paramount importance. Hence, I encourage you to use this method if necessary.

To do so, you’ll need strong reasons to ask creditors for lower interest rates and APR on your credit card and work up a new repayments schedule. Generally, no creditor will give any freebies and instead, act in own interests. However, you could get some relief through lower APR or reduced payments, though these aren’t really permanent solutions to credit card debt. After all, you’ll still have to repay the full amount and the pain of repayment will prolong.

Stepping Up Income to Repay Card Debt

There’s one more superb way to up the ante against all your credit card dues. And that’s by stepping up your earnings or income. To most persons, this could sound like the proverbial tall order. It isn’t, if you think carefully.

About 50 percent of America’s adult population now engages in freelancing or take side-gigs to augment their primary income. They utilize their spare time for gainful purposes and work online from home to get extra money. You too could boost personal finances by finding suitable online work. There’s myriad types of online work up for grabs, if you’ve the needed skills and inclination.

Working freelance or taking side gigs doesn’t merely help demolish your credit card debt: it also clears your path towards financial stability and eventual financial freedom. Spending a few hours extra on working daily from home makes you a lot richer.

Astute Budget and Spending

Creating an astute budget that provides for all needs and a few wants would definitely help slice off a lot of precious dollars from your monthly expenses. A budget is actually a plan for lifetime that helps you make well-informed decisions on expenditure and savings. Persons that create a superb budget and adhere to it strictly, generally have lower debts and better financial management with lots of savings and investments.

Budgeting is simple but adhering to one could prove complicated. Therefore, I encourage you to use any of the latest Artificial Intelligence based budgeting apps and online resources that’re available free or for a small subscription nowadays. Such apps track spending and alert you when overstepping a fixed budget. They could also help find unnecessary expenses and places where you’re wasting money. That way, you can stem any wastage of your well -earned income.

Wrap Up

All these techniques to minimize and eventually eliminate credit card debt and high APR are time tested and proven. Personally, I own a single secured credit card and if I need to buy something on credit, I prefer Buy-Now-Pay-Later apps. That way, I have superb control over my personal finances, income and spending. You too could try these techniques and embark on your personal journey towards financial freedom. The above methods work well, if you’re willing to exert those few extra efforts towards personal financial wellbeing.