Credit cards can be a huge convenience. But if you aren’t careful, they are also an easy way to get into serious financial trouble and end up with high debts and bad credit.

The best way to handle credit cards is to spend frugally and pay promptly. But for those people already struggling, the following are some simple steps for reducing one’s credit card debt.

Key Takeaways

• Credit card debt is expensive, and having too much of it can hurt your credit score.
• Credit cards have high interest rates, so any balance left at the end of the month can grow quickly.
• To reduce your credit card debt, try to pay off your balance as much as you can at the end of each month.
• If you have several credit cards, try to pay off the one with the highest interest rate first.
• Make sure you at least meet the minimum payments each month. One missed payment can seriously damage your credit rating.

Downsides of Credit Card Debt

There are many good reasons to carry less credit card debt or even none at all. Among them:

Cost

Credit card interest is much higher than other forms of debt. In fact, card interest, on average, runs about two to three times the interest rate for a home-equity loan or mortgage. It can also take a big bite out of your monthly budget.

Financial advisors generally say the average person shouldn’t pay more than 10% of their net take-home pay on credit cards or other consumer debt (not including mortgages), notes Howard S. Dvorkin, a certified public accountant and founder of Consolidated Credit Counseling Services. Spending more than that might make it harder to make other ends meet.

Risk

Lewis J. Altfest, a certified financial planner in New York whose clients tend to be professionals with large incomes, says credit card debt often represents a risk. It can also be an early warning sign of trouble ahead. “Too frequently, [financial planners] see abusive use of credit leading to financial difficulties,” Altfest writes. “Sometimes people just get in too deep.”