The current high interest rate environment is putting a strain on many Americans’ finances. After years of keeping rates near zero to stimulate the economy during the pandemic, the Federal Reserve aggressively increased rates starting in early 2022 in an effort to cool stubbornly high inflation. And, while the Fed has kept rate hikes paused for the last several meetings, the federal funds rate currently stands at its highest level in 23 years.

But now finances have been stretched thin by rising costs of essentials like food, housing and energy, so many people have had no choice but to turn to borrowing products, like credit cards, to help cover their costs. Carrying credit card debt can be crippling to your finances, though, especially now that the average credit card rate hovers above 21%. After all, the minimum payments alone may not cover much more than the interest charges on your balance, causing the total balance to rise uncontrollably.

In turn, getting out of high-interest credit card debt needs to be a top priority for most people. But how much credit card debt does the average American have now, and what are some potential strategies that can help get rid of it?

Find out more about your credit card debt relief options today.

Here’s how much credit card debt the average American has (and how to pay it off)

The average American household now owes $7,951 in credit card debt, according to the most recent data available from the Federal Reserve Bank of New York and the U.S. Census Bureau. But that’s just the average. The amount of credit card debt also varies significantly by generation, with members of the Generation X and baby boomer generations carrying the most credit card debt per person on average. Here’s what that breaks down to:

• Generation X (ages 42 to 57): $8,134
• Baby boomers (ages 58 to 76): $6,245
• Millennials (ages 26 to 41): $5,649
• Silent generation (ages 77+): $3,316
• Generation Z (ages 19 to 25): $2,854

But whether you’re carrying about the average or more than the average credit card debt for your generation, here are a few ways to pay off what you owe. 

Learn more about how to pay off your credit card debt here.

Utilize a debt management plan

Enrolling in a debt management plan with a debt relief company can be a helpful tool if you’re trying to pay off your credit card balances. With a debt management plan, you may be able to consolidate your monthly payments into one and get lower interest rates on your credit cards, making it more affordable to pay off what you owe. These plans typically run for three to five years, allowing you to pay off your debt completely during that timeframe.

Pay it off with a debt consolidation loan

A debt consolidation loan from a bank, credit union or online lender may also be worth considering. This type of borrowing allows you to take out a new fixed-rate loan to pay off multiple credit cards, consolidating revolving debt into one installment payment. This transforms your revolving credit card debt with fluctuating interest rates into one fixed payment, ideally at a lower APR than what you were paying on the credit cards. That, in turn, saves you money on interest and also helps to expedite the payoff process. 

Consider debt settlement

Working with a debt settlement company could also be a solution to paying off your credit card debt. When you use this type of program, experts from the debt settlement company work to negotiate lump-sum settlements with creditors for less than what you owe. You make monthly payments to the debt settlement company rather than the credit card lenders, and when enough money is saved up from your monthly payments, lump-sum payments are issued on the settled debt. 

This can cut down drastically on what you owe on your credit cards and help expedite the payment process. However, this option does have a major negative impact on your credit score, and credit card debt settlements are usually taxable as well, so it’s important to understand all of the potential benefits and downsides before choosing this option.

Open a balance transfer card

If you have good credit, you may qualify for a balance transfer credit card that allows you to transfer balances from other cards and then charges 0% APR for an introductory period of 12-21 months. This interest-free window can help you make a major dent in your principal balances.

Pay it off with a personal loan

Taking out a personal loan — which have an average rate of about 12% currently — can save a significant amount of money compared to the rate of 21% (or higher) that many credit cards currently charge. And, using a fixed-rate personal loan to pay off credit card balances consolidates multiple payments into one while lowering the interest costs over the life of the loan.

Focus on the debt avalanche or snowball method

With the debt avalanche approach, you pay minimum amounts on all your debts except the one with the highest interest rate, which you attack with any extra funds available. Once that debt is paid off, you “avalanche” all available payments onto the next highest-rate debt, and so on, accelerating your debt payoff.

Similar to the avalanche method, the snowball method also helps keep you on track with paying down your credit cards. The big difference is that you focus on the smallest balances first to score some quick wins that can motivate you to keep going. Once the smallest debt is paid, you roll those payments onto the next smallest, and the next, gaining momentum like a snowball rolling downhill.

Trim your expenses and boost your income

Finding ways to cut back on non-essential expenses and/or increase your household income — even temporarily through a side gig — can free up extra cash flow. And, by putting that extra cash toward paying down your credit card debt, you may be able to get rid of your balances faster than you otherwise would have. 

The bottom line

Today’s high interest rates and other economic challenges are making it tough for many people to get rid of their credit card debt. But while paying off credit card debt is rarely easy, it’s possible. And, that starts by implementing a smart strategy, like the ones outlined above, while staying focused on the goal. And, the sooner you can break free from the burden of high-interest revolving balances, the sooner you can start rebuilding your financial security.