Practical tips on reducing credit card debt

[UNITED STATES] In a world where mounting credit card debt has become a financial burden for millions, renowned personal finance expert Suze Orman is stepping up with straightforward advice on how to tackle this pervasive issue head-on. Speaking in a recent interview and through her platform, Orman shared her no-nonsense approach to paying off high-interest debt, urging people to act now before the situation worsens.

According to recent data from the Federal Reserve, U.S. credit card debt reached a staggering $1 trillion in 2024, marking an all-time high. As the average interest rate for credit cards continues to hover around 20%, many consumers find themselves trapped in a cycle of minimum payments and escalating balances. Orman, who has long been a trusted voice in the realm of personal finance, is offering a clear, actionable plan to break free from the debt trap.

The Harsh Reality of Credit Card Debt

Credit card debt is a financial burden that can quickly spiral out of control if not managed effectively. For many Americans, the temptation of easily accessible credit leads to overspending, which, combined with high interest rates, results in growing balances that seem impossible to pay off. Orman’s blunt advice cuts to the core of this issue.

“We are living in a time where people are avoiding their debts, hoping it will go away,” Orman explained. “But it won’t. You need to face your fears, confront your financial reality, and take action now. The longer you wait, the worse it gets.”

Orman’s Five-Step Plan to Conquer Credit Card Debt

In response to this growing crisis, Orman has outlined a five-step strategy that she believes can help people eliminate credit card debt once and for all. The plan focuses on practical actions, discipline, and emotional resilience.

1. Face Your Financial Reality

The first step to tackling credit card debt is confronting the problem head-on. Orman stresses that denial is the biggest barrier to overcoming financial obstacles. “You cannot fix what you do not face,” she says. She recommends starting with a thorough review of all outstanding debts, interest rates, and monthly payments. By understanding the full scope of the issue, individuals can better plan their strategy for repayment.

2. Stop Accumulating More Debt

Orman’s second piece of advice is non-negotiable: stop using your credit cards. This may sound obvious, but it’s an essential step. With every new purchase, the debt continues to grow, making it harder to get ahead. Orman suggests that individuals consider cutting up their cards or, at the very least, keeping them in a secure place where they won’t be tempted to use them.

“Debt won’t go away if you keep adding to it,” Orman points out. “It’s time to put the brakes on.”

3. Focus on High-Interest Debt First

Next, Orman recommends prioritizing the repayment of high-interest credit card balances. The strategy, often referred to as the “avalanche method,” involves paying off the credit card with the highest interest rate first, while making minimum payments on others. Once the highest-interest debt is paid off, the money previously allocated to it can be redirected toward the next highest-interest balance.

This method can save individuals significant amounts of money in the long run by reducing the amount spent on interest.

4. Create a Budget and Stick to It

A clear, actionable budget is critical to eliminating debt. Orman advises individuals to create a detailed budget that accounts for all income, expenses, and debts. This will help identify areas where unnecessary spending can be reduced, freeing up more money to pay down credit card balances.

“Look at where your money is going and make conscious decisions about what’s essential and what’s not,” Orman says. “The key is consistency. Stick to your plan, even if it’s difficult at first.”

5. Consider Debt Consolidation or a Balance Transfer

For individuals with multiple high-interest credit cards, Orman suggests exploring debt consolidation or a balance transfer option. Debt consolidation involves combining several debts into one loan with a lower interest rate, which can make repayment more manageable. Similarly, a balance transfer credit card may offer a 0% introductory rate for a period, allowing consumers to pay down their debt without accumulating additional interest.

Orman advises caution when choosing these options, stressing the importance of fully understanding the terms and fees involved.

The Emotional Component of Debt Repayment

In addition to practical financial strategies, Orman highlights the emotional aspect of dealing with debt. The shame and guilt that many individuals feel about their financial situation can be paralyzing, but Orman encourages people to be kind to themselves and stay focused on their long-term goals.

“Debt doesn’t define you,” she reminds her followers. “It’s just a situation that can be fixed if you’re willing to do the work. Forgive yourself and take action.”

Why Acting Now is Crucial

Orman’s urgency in tackling credit card debt is rooted in the belief that delays only lead to further financial strain. With interest rates climbing and the cost of living increasing, procrastination can lead to even higher balances. She urges people to begin their journey toward financial freedom as soon as possible, emphasizing that taking small steps consistently over time can yield big results.

“Debt is not just a number,” Orman says. “It’s a weight on your life, and it’s time to take it off.”

The Bigger Picture: Financial Education and Empowerment

In her ongoing mission to empower people to take control of their finances, Orman also advocates for better financial literacy. She argues that a lack of understanding about how credit works contributes to the widespread accumulation of debt. Financial education, Orman believes, is key to preventing future generations from falling into the same traps.

“The more you know, the better decisions you can make,” she asserts. “And it’s never too late to start learning.”

Suze Orman’s advice is clear: there is no time like the present to confront credit card debt. By following a structured plan and committing to the process, individuals can regain control of their financial lives and break free from the burden of high-interest debt. With a bit of discipline, focus, and perseverance, financial freedom is within reach.

For those struggling with credit card debt, Orman’s message is both a wake-up call and a beacon of hope. The power to change your financial future is in your hands—if you’re willing to take the first step.