Strategies to tackle debt

The coronavirus crisis has revealed a debt divide among Americans.

The majority of people have managed to stay on top of their credit card bills, an October LendingTree study found.

On the other side of the divide, “some people are really struggling because they’ve been laid off or have had their hours cut,” said Bruce McClary, a spokesman for the National Foundation for Credit Counseling. Many of those people don’t have a financial safety net, he said, “so they’ve had to fall back on credit cards.”

If you’re behind on bills, here are strategies to pay down debt.

Talk to your creditor. Many credit card companies offered relief programs to customers when the pandemic started. Some programs have since expired, but some still exist, McClary said.

If your credit card company no longer advertises COVID-related

assistance, McClary recommends contacting it anyway. “It’s a known fact that creditors offer relief programs off the menu,” he said. “You’ll have to show that you’re facing a hardship, but companies may be able to provide some kind of solution for you, at least in the short term.”

If you are on a deferment plan with your card company, check in each billing cycle, said Michelle Jones of Money Management International, a nonprofit credit counselor. “Some credit card companies are making decisions every 30 days on whether to extend deferments,” she said.

Request a lower interest rate.

If your credit score has improved, you may be able to negotiate a lower rate on your cards. “They’re unlikely to give you a huge decrease in your APR, but every little bit counts,” said Ted Rossman, a credit industry analyst at CreditCards.com.

Transfer your balance to a new card. Save money by transferring the balance on a high-interest credit card to one with a low or 0% introductory rate. Look for a card that has a low balance-transfer fee. Be aware that not everyone qualifies, and if you don’t pay down the balance while you’re getting the rate break, you could end up back where you started. “Balance transfers have gotten a lot harder to obtain during the pandemic,” Rossman said. “Right now, you typically need a 735 credit score to qualify for a balance transfer card. Last year, it was about 710.”

Pay off high-interest credit cards first.

If you’re carrying debt on multiple cards, there are two approaches you can take: the snowball or the avalanche. The snowball method entails paying off your cards in order from the smallest balance to the largest, which can help you gain momentum (much like rolling a snowball down a hill). The avalanche method targets debts on the cards with the highest interest rates first, saving you more in interest than the snowball system.

See a credit counselor. If you need help, a credit counselor can assess your finances and devise a customized plan to pay off your debt. They also may be able to negotiate with creditors on your behalf. You can find one at www. nfcc.org.