Recent data shows that credit card balances (and delinquencies) have been rising steadily for the last three years. And, the reasons are simple: With high inflation and soaring rates on loans and mortgages, many consumers are turning to credit cards in a financial pinch. They’re easy to qualify for and incredibly convenient to use.

Unfortunately, they can also hurt your credit — especially if you skip payments or wrack up too-high balances.

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3 ways to settle your debt without hurting your credit score

Are you dealing with high credit card debt? Here’s how to tackle it without hurting your credit further.

Choose a debt payoff method and stick to it

To start, make sure you’re making payments that are larger than the minimum payments required by your card issuer. This reduces your principal balance and, in turn, your interest costs.

Create a household budget and see where you can cut corners. Then, put any extra cash you’ve found through those cutbacks to reduce your debts. Generally, financial professionals recommend putting at least 20% of your disposable income toward debts and savings each month.

If you have several credit cards with balances, “use either the debt snowball method — paying off the smallest debt first, or the debt avalanche method — paying off the highest-interest debt first, to systematically reduce your debt,” says Kristy Kim, founder and CEO of TomoCredit.

The quicker you can get your balances to 30% or less of your total credit line, the better. According to credit bureau Experian, that’s when your balances start to have a “pronounced negative effect” on your credit score.

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Consolidate your debt

Another option is to consolidate your debts — using another credit card or loan to pay them all off at once. This rolls them all into one loan and, as long as the new credit card or loan has a lower interest rate, can save you on long-term interest, too.

Opening the new card or loan will result in an initial hit to your credit score, but Howard Dvorkin, a certified public accountant and chairman of Debt.com, calls it “a classic case of taking a half-step backward to take two steps forward.”

“Yes, in the very short term your credit score may drop, but if you make payments on time and in full, your score will soon rise,” Dvorkin says. 

The key is to make sure you’re paying the credit cards off with a lower-rate product. This might mean a personal loan or home equity loan (both tend to have lower rates than credit cards these days), or it could mean using a balance transfer card. In the case of the latter, these often come with promotional 0% interest rates for a period of time. You’ll just need to make sure you pay off the balance or transfer it to a new card before that promo rate expires.

Additionally: Make sure you keep your old credit cards open once you pay them off — just don’t use them.

“The average age of your open accounts is a factor in determining your score, so while closing a card may be tempting after consolidating your debt, it might be better to keep it open, especially if there is no annual fee,” says Gabe Kahn, director of credit at Arro Finance. “If you’re concerned that you’ll use the newly available credit to continue spending, though, closing the card and taking a minor hit to your credit might be a good idea instead of ending up in debt again.”

Get on a debt management plan

A debt management plan is also an option. These are available through credit counseling agencies and debt relief companies, and often result in reduced interest rates and waived late fees. 

You’ll pay your credit counseling company monthly, and they’ll work with your creditors to pay off your balances by a certain deadline (often within three to five years).

Dvorkin says these plans are similar to consolidation when it comes to your credit score.

“Your score might dip momentarily, but it comes back stronger than ever,” Dvorkin says. “In both these cases, you’re making on-time payments that lower your debt burden.”

The bottom line

Whatever you do, stay on top of your payments. And if you think you may have trouble making them, call your credit card issuer for options.

“The worst debt strategy for your credit score is to consistently make late payments or miss payments entirely,” Kim says. “Payment history is the most significant factor in determining your credit score.”

The price of gold has been on the upswing lately, such as with many investors trying to hedge against inflation and looking to diversify in these uncertain times. In May 2024, there was a record gold price per ounce of over $2,400, though prices have since dropped a bit, leaving the price of gold to hover above $2,300 per ounce (as of July 5, 2024). 

Amid these conditions, many investors are still eager to buy gold, but before you pay over $2,300 for a 1-ounce gold bar, it’s important to understand what to look out for. 

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Buying 1-ounce gold bars as a beginner? Do these 5 things first, experts say

Consider the following expert tips if you’re planning to purchase 1-ounce gold bars in today’s economic environment:

Choose a reputable dealer

Gold investors should be cautious about where they buy from. Take the time to find a trustworthy dealer.

“The precious metals industry is federally non-regulated, so working with a reputable dealer is priority number one. Choose an established company with a solid reputation; it is truly the most important step you can take,” says Andy Schectman, CEO at Miles Franklin.

Explore your top gold investing options online here.

Choose a reputable production source

You can’t buy directly from sources like the U.S. Mint, which is why you need to find a reputable dealer first. However, where your gold bar was actually created can make a difference.

“Once you find a dealer you trust, look for a bar manufacturer or refiner that is highly regarded,” says Schectman.

Some gold bar mints are private while others are government-run. Either way, choosing a bar that comes from a highly regarded mint can make a difference.

“Some well-known private mints include PAMP and Valcambi. Sovereign mints such as the US Mint, the Royal Canadian Mint, the Perth Mint, and other government-run mints produce high-quality bars that have very high production standards,” says Brett Elliott, marketing director at APMEX.

This can make a valuable difference when it comes to selling your gold bars in the future.

“A serialized bar from a well-known mint will help you sell the bar without the need for destructive assays. A fire or acid assay is sometimes used to test purity, which destroys a small bit of the gold bar and lowers the value,” adds Elliot.

Consider the full costs

The spot price of gold that you see in financial headlines doesn’t always track exactly with what you’d pay when buying gold from a dealer, as they’re making a margin on the sale. However, you can often pay a lower premium when buying a 1-ounce gold bar, compared to a smaller denomination, like some gold coins.

“Bars tend to follow gold spot price very closely, so I recommend getting a good deal as close to spot price as possible,” says Adam Butler, senior account executive at Anthem Gold.

Still, it’s important to understand the full costs of buying gold, such as those related to custody. Even if you don’t pay storage costs by just keeping the bar at home, you may want to up your insurance.

“Unfortunately, most homeowner’s insurance policies are not going to suffice since their coverage limits are around $1,000 or less” for gold,” says Michael Unger, vice president of investments and planning at Coral Gables Trust. “With the current price of gold around $2,350 an ounce, you will need to take out a separate insurance policy specifically to protect it.”

Taxes can be an issue too, and that might spur some investors to avoid gold bars in favor of exposure via gold futures, gold stocks, and other assets that do not require physical possession.

“Before purchasing physical gold, investors should be aware of the digital alternatives. Gold can easily be purchased through an ETF, which will help reduce the hidden costs of ownership. This route not only provides efficiencies through transaction costs but can be taxed at a more favorable rate,” says Unger. 

“The IRS views gold as a collectible, which places it in the maximum capital gains tax rate of 28%. Investors can bypass this by purchasing gold stocks or ETFs that invest in mining companies to reduce their maximum capital gain tax rate to 20%,” he adds.

Consider safety

Related to the full costs of gold investing, if buying physical bars, you should also have a plan first of how you’re going to keep them safe, especially if you’re keeping them in your home.

“The three layers of security you should consider for home storage are secrecy, utilizing a hidden location, and using a good safe,” says Elliott. “Secrecy is the best security. Most of the safes you find at sporting goods stores can be opened by a professional burglar with a crowbar in less than a minute. If no one knows you have gold, you’re less likely to be targeted.”

Think about liquidity

Lastly, even if you plan to keep gold indefinitely, you never know when circumstances will change, so you should be aware of liquidity options ahead of time.

“New investors should first ensure they have a savings account for emergencies before investing in gold. While gold is easy to liquidate, the value of gold changes constantly. You don’t want to buy gold and then be forced to sell in the short term to cover living expenses,” says Elliott.

You also might decide that you’d rather make a gold investment that does not involve physical gold, as that could enable you to liquidate your assets faster and potentially at a lower premium.

The bottom line

While buying 1-ounce gold bars can help investors diversify, it’s important to understand the full scope of what you’re getting into before making a purchase, especially considering the relatively high price of gold per ounce. You don’t want to spend thousands of dollars on a gold bar from a non-reputable source, for example. And you want to make sure that you account for the full costs and risks before making such a big purchase.