NEW YORK (CBSNewYork) — If you’re like most Americans, you’re probably carrying some credit card debt.

This year, that outstanding balance is going to cost even more, as the Federal Reserve increases interest rates.

“I basically spent my twenties racking up credit card debt,” one New Yorker said.

“My Visa is in collection now,” another said.

Credit card debt in the United States has hit an all time high.

“It’s around $1-trillion,” credit counselor Matt Fellowes said.

For many people it’s hard to imagine ever getting out from underneath credit card debt, but it can be done, said CBS money expert Jill Schlesinger.

Let’s say your paycheck is going up by $200 a month.

For starters, Schlesinger says take a portion of the increase you’re getting in your paycheck under the new tax law, and put it towards a credit card.

“So why don’t you make an extra $100 payment on that highest interest debt,” she said.

You can automate the payment, so it effortlessly goes towards your credit card every month.

Whatever is leftover can go in an emergency fund.

“The reason why most people have credit card debt is not that they are going to Starbucks too much, or going to a department store and buying clothes. Credit card debt largely starts and is maintained because people don’t have emergency savings,” Fellowes said.

An emergency fund will help to avoid charging unforeseen expenses Fellowes said. He recommends taping the amount you owe to the front of each card.

“Just having the visual reminder every time you pull out your credit card is enough to stop using your credit card when you shouldn’t be using it,” he said.

“There are some people who do loans against their 401Ks. I know it’s very tempting,” Schlessinger said.

While personal loans and loans against your 401K can work, Schlessinger said make sure you now all the terms and conditions. The same holds true for balance transfers.

“The balance will transfer and you’ll get a lower rate for a certain period of time, so it’s a great tool. If you’re going to have better cash flow this year, and you can really accelerate your debt, pay down, but if you’re going to be stuck with this thing for the next three years, you may find a low rate for the first year and then it pops back up even beyond the rate you’re currently paying,” she explained.

Fellowes said paying off cards with the smaller balances first, may be contrary to what we’ve been told in the past, but psychologically it can help you feel a sense of accomplishment when it’s gone and establish good behavior.

 

 

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