Responsible credit card usage can offer great perks, like travel points, sign-up bonuses, fraud protection, and more. And, while there’s no easier way to pay than swiping a credit card, credit card debt can quickly become debilitating. With credit card APRs often soaring over 20%, that debt becomes a major burden. In fact, according to the Federal Reserve, U.S. credit card debt has reached a staggering high of $1.17 trillion!

If you’re facing high-interest credit card debt, you’re clearly not alone. Here’s how you can reduce your monthly payments (and stress) to secure a healthier financial future.

Focus on High-Interest Credit Card Debt First  

The first step to tackling credit card debt is to focus on the highest interest rates. Credit card balances accrue monthly and will accumulate the most interest over time.

• Start paying off a monthly chunk of that debt to avoid accruing more in the highest-interest debt bucket. Credit card interest usually compounds daily, so the more you can afford to pay now…the better.
• Contact your credit card issuer to discuss potential payment options. Credit card companies may be willing to reduce your APR if you have been responsible for making monthly payments. It never hurts to ask.
• Commit to consistent and timely payments. Yes, it sounds obvious, but sticking to a monthly budget and payment plan can totally shift your mindset and allow you to pay off more credit card debt than expected!

Use Your Home Equity to Pay Off Credit Card Debt

One of the most effective ways to reduce credit card debt is by leveraging home equity financing. Mortgage rates are lower than credit card rates – so a cash-out refinance allows you to refinance your mortgage for a larger amount and use the cash to pay off credit card debt.

When considering how to use home equity financing, remember that a home equity loan is a second loan on top of your mortgage, and a cash-out refinance replaces your existing mortgage with a larger loan (and you receive the difference in cash).

• Streamline your payments: Combining all of your debt into a single, stable monthly payment makes it easier to manage your finances.
• Lump sum of extra cash: Typically, home equity lenders allow you to borrow up to 80% of your home’s value.
• At Lower, we offer Free RefiFor Life, meaning you can refinance again if mortgage rates drop in the future.

Still need help? Learn how to make the most of home equity financing here.