As the pandemic continues, so does consumer debt.
While the stimulus check in March provided a much-needed financial boost to many Americans, many continue to struggle to pay off their debt. There are several strategies consumers can implement to help manage their debt and stay on top of their bills.
Talk to Your Creditors
It may be helpful to talk to your creditors about customer relief programs. Many creditors implemented these put programs in place in March and some still exist today. You may be able to request a lower interest rate or transfer your balance to a new card that has a lower interest rate.
Look for a card that has low balance-transfer fees. For example, Navy Federal Credit Union's Platinum credit card has no balance transfer fees, and it charges 0% introductory APR on balance transfers for the first 12 months.
Pay Off Your Highest Balance First
It's important to pay off your highest interest credit card first to minimize the amount of interest you pay. If you have outstanding debt on more than one credit card, there are two approaches you can take: the debt snowball method or the debt avalanche method. The snowball method entails paying off your cards in order from the smallest balance to the largest, which can help you gain momentum (much like rolling a snowball down a hill). The avalanche method targets debts on the cards with the highest interest rates first.
Consult a Credit Counselor
Consult a financial professional who can sit down with you to assess your finances and help you devise a customized plan to pay off your debt. They may also be able to negotiate with creditors on your behalf.
If you find it difficult to deal with medical debt, it is recommended that you talk with your health care provider. Oftentimes, hospitals will lower or even forgive the debt, depending on your financial situation. Many hospitals have financial aid programs that will work with patients to manage their medical bills however, you need to ask about the options available.
Consult a medical billing advocate. If you can't make any headway on your own, or if your health care provider has sold your debt to a debt collection agency, a medical billing advocate can help you contest billing disputes—by some estimates 30% to 40% of medical bills contain errors—and in some cases negotiate for costs to be lowered.