The Wisconsin Bankers Association offers for your use the following consumer education column. Your bank is free to use this as a community column in your local newspaper, a letter to the editor, a press release or in any other way you see fit. The purpose is to give our members an easy-to-use tool for promoting the banking industry to Wisconsin's communities. 

Have credit card debt? You're not alone. According to analysis from NerdWallet, at the end of 2018 the average U.S. household owed just under $7,000 in revolving credit card debt (the balance carried from month to month). Unlike more benign debt like a mortgage—where you gain assets (equity in the house) as you pay off the debt—credit card debt is a drag on your finances with no benefit to you. With interest rates rising, now is the perfect time to make a plan for becoming debt-free. There are several strategies you can use to pay off your credit card debt in manageable increments. Here's a look at five of the most effective options:

1: Follow a Budget
The first step in paying down debt is to create a monthly household budget. This will give you an accurate view of how much you make, how much you spend, and how much you can afford to put toward paying off debt each month. It can also help you see where you can redirect some money each month toward paying down your credit card debt. One popular example is to commit to skipping the morning coffee run every day and putting the extra toward your debt. For example, if you spend an average of $3.00 on your coffee every weekday morning, that's $60 every month you could put toward paying down your debt. That's $720 in a year! If you're not sure how to set up a budget or track your expenses, ask your bank. Most financial institutions have tools built into their online banking software that can help you.

2: Increase Your Monthly Payments
The most effective plan for paying down credit card debt is to pay more than the minimum balance every month, even if it's only by a few dollars, and always pay on time. By doing this, you will decrease the amount on your credit card bill that's only interest on what you didn't pay from last month, and you'll avoid costly late payment fees that make it harder to pay off your balance each month. If possible, increase the amount you pay each month to cover more than what you owe for that month. For example, if your total credit card bill is $1,000 and you spent $500 this month, pay $750 even if the minimum payment is only $25. 

3: Tackle the Highest Interest Rate First
If you're carrying debt on multiple credit cards, a great plan is to focus on paying down the one with highest interest rate first. This approach is effective because it gives you the most bang for your buck. The higher the interest rate, the more expensive the debt is and the more it will cost you in the long run. For example, if you owe $3,000 on a 20% interest credit card and $4,000 on a 15% card, this strategy advises paying off the first credit card debt first because it will have a bigger long-term impact than paying the higher balance first.

4: Sort Debts by Principal Size
Another possible strategy is to sort your debt by the principal size (the amount you still owe, not including interest). One school of thought says to pay off the largest principal first, because it typically has the largest monthly payment. Therefore, once that debt is paid off, you'll have more money left each month to apply to other debts. On the other hand, some think that paying off the smallest principal first works better. That strategy is most effective if you've experienced a financial windfall (such as a higher-than-expected tax refund) and are able to completely eliminate one of your debts. For example, if you've been carrying $2,500 on a credit card that you don't use anymore, using your tax return to completely pay off the card and then cancel it will be more beneficial than spreading that money around to all of your debts and then continuing to make just the minimum payment on that credit card.

5: Consolidate
Finally, another plan that works very well for many people is to consolidate your debts into a single payment. Sometimes done by taking out a home equity loan or a personal loan, consolidation is an effective way to combine all of your individual debts into one loan with one payment, ideally at a better interest rate than what you were paying. This is a common tactic for credit card debt held on multiple cards with similar interest rates. If you are able to consolidate, it may feel like you've just eliminated a lot of debt, but be sure to control your spending to avoid piling more debt on top of what you already owe.

If none of these strategies seem to be working, or you feel that you need help selecting the best plan for your circumstances, speak to a professional. Your banker will be able to assess your situation and recommend a plan of action that you can achieve.

An archive of Consumer Columns is available here on WBA's website.

Visit MyMazuma for the latest financial education resources for consumers, including budgeting tools and advice for paying down debt.