Consumer credit card debt in the U.S. has reached a new high, according to numbers released by the Federal Reserve. And while jumps in credit spending are normally tied to increased consumer confidence, bigger balances can also mean growing interest costs for everyday credit card users.

The Fed’s report shows a total of $1.02 trillion in revolving balances nationally, or an increase of about 13.25 percent since last year. This follows a pattern of steadily rising annual balances, doubling the 6.6 percent jump recorded in 2016.

If you find yourself a contributor to this growing debt, and are looking to distance yourself from it, there are a number of routes you can take to reduce your balance.

Use a 0 percent APR credit card

One of the most popular ways to curb interest exposure on existing debt is to transfer your balance to a card with a 0 percentAPR. Balance transfer cards allow consumers to temporarily delay interest accrual, usually for a period of 12 to 18 months, sometimes longer.

They do come at a cost, though; most cards charge three to five percent fee on the transferred balance. Still, the cost is worth comparing to the amount of money saved by not paying interest.

An alternative to balance transfer cards, and another way to temporarily avoid interest while paying down debt, are cards that offer a 0 percent APR on purchases. This strategy involves putting all new purchases on a card that charges no interest. This helps insure that you won’t add to your existing interest-accumulating balance while you work down your debt.

A non-credit card option to reduce interest on an existing balance is taking out a debt consolidation loan

Home equity lines of credit (HELOC) are common options for debt consolidation as they often offer lower interest rates compared to alternatives. However, you need to have built equity in a home, so they won’t be available to non-homeowners. They also present a unique risk—if you can’t repay the loan amount, you risk losing your house.

Personal loans, unlike HELOCs, do not require collateral. No security for the lender usually means higher interest rates, though, which makes this option best for people who have good or excellent credit. Likewise, people with poor credit may have a hard time getting approved for a personal loan.

If you have a retirement plan like an IRA or 401k, you can often borrow against these savings for shorter-term interests like debt consolidation. The disadvantages here are hefty fees and tax penalties in the event you don’t pay back the loan on time. For this reason, borrowing against a retirement plan is usually considered a last-ditch effort for debt consolidation.

Other reasons you should reduce your debt

Limiting interest is usually the most obvious cause for reducing debt, but there are other benefits to shrinking your balance that you might not have considered.

Holding a large credit card balance can seriously hurt your credit. Your credit-utilization ratio, or the amount of debt you hold as a percentage of credit available, accounts for 30 percent of your FICO score. Generally speaking, the higher the ratio of debt to credit, the lower your credit score will be. So, paying down debt can play a large part in boosting your credit.


National revolving debt may be growing, but that doesn’t mean yours has to. Take the Fed’s latest announcement as an opportunity to examine where your debt is coming from. You may find there are plenty of opportunities to pare back spending and work that debt down to zero.

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