Credit Card Debt: Good or Bad? And How to Get Rid of It

Credit Card Debt: Good or Bad? And How to Get Rid of It
Point Editorial

Having credit card debt means that you haven’t paid off your whole balance. This balance is carried over from month to month and accumulates interest. 

On the surface, credit card debt may seem like a bad thing. And while it certainly is when it spirals out of control, it can also be beneficial.

Read on to learn more about credit card debt, the benefits and drawbacks of having debt, and strategies to help pay it off. 

What is credit card debt?

Interest rates incurred by credit card debt are some of the steepest in the financial sector. 

Your credit activity, including your payment history, credit utilization, and credit mixes, is automatically reported to the three major credit bureaus, Experian, Equifax, and TransUnion. With this data, your credit score is calculated. Your credit falls under one of five categories: poor, fair, good, very good, and excellent. 

While there isn’t a perfect credit score, higher scores yield favorable credit terms. Banks and credit companies are then more likely to enter into business with you down the road when you have a high credit score. 

Payment history and credit utilization are the two most significant factors in determining your credit score, accounting for 35 and 30 percent of your overall score, respectively.  

Benefits of credit card debt

On the surface, credit card debt may seem totally disadvantageous, but it can actually be advantageous. Not only does it mean that you have access to a steady source of funds, but it proves to creditors and other lenders that you can adhere to a repayment schedule. Other benefits of credit card cards include the following:

One: Revolving credit. This means that you can borrow the money continuously. Your credit card issuer will predetermine a maximum credit limit. You’re responsible for paying off any purchases made with your card each billing period, which you see on your monthly credit card statement. Your statement will show your credit card’s balance, and once a new billing cycle begins, you can borrow money again. 

Two: Monthly payments are lower than payments for non-revolving loans.

Three: You have the choice of making minimum payments or completely paying off your balance. 

Four: Improving financial competence and independence. Banking cards are highly prevalent these days; virtually everyone has one. Owning a credit card is a big responsibility but a near-necessary step in today’s highly digitized world. Many companies or services require a credit card authorization, since the company is guaranteed to receive their payment.

An intelligent tool to help you achieve this is Point Card

Designed as a transparent, easy-to-use alternative payment card, Point Card allows cardmembers to have monetary autonomy and spend their own money. Point cardholders also receive exclusive benefits, like unlimited cash-back and bonus cash-back on subscriptions, food delivery, rideshare services, and coffee shop purchases. 

In addition to these perks, built-in safety nets ensure the financial well-being of all cardholders. This includes car rental and phone insurance, not to mention travel perks and fraud protection with zero liability. You work hard to forge your wealth, and Point works hard for you in return. You can take control of your finances and strive toward achieving your goals, whether that involves paying off your debts, saving for your dream vacation, or going back to school. Point has your back every step of the way. 

Downsides of credit card debt

One: The potential to fall into further credit card debt is relatively high. The temptation to overspend is always lurking in the shadows since you’re borrowing the credit company’s money to make purchases instead of using your own, as you would with a debit card.

Two: Credit card interest charges are high. The average credit APR interest rate (the cost of using the card every year) is around 18 or 19 percent, compared to a low rate of three to seven percent for car loans or mortgages.

Three: Deferred interest. Extending on point two, many card retailers offer customers a zero percent introductory period. While this can be helpful in the beginning, you’re simply postponing those heavy credit card payments. If you don’t pay off your entire balance by the time the introductory period comes to an end, you’ll face a penalty.

Four: Fraud. If your card is lost or stolen and fraudulent purchases push you over the edge into debt, you can dispute those charges. Most credit cards offer some form of fraud protection, but the process of investigating the fraud and scrubbing it from your credit report can be troublesome and takes time to resolve. 

How to pay off credit card debt

Behaviors that help reduce your credit card debt and even aid you in paying off the total debt amount are essential in maintaining good financial health. That said, four strategies to help you achieve are listed below. 

Tip #1: Find a payment strategy or two. Having a payment strategy in place is a great way to help you stay on top of your bills and will help you budget better by keeping your debt under control. A few methods are: 

Pay more than the minimum

Standard monthly minimum payments are usually two or three percent of your overall balance. You won’t have to worry about compounding interest or late fees if you pay off more than this amount. 

Debt snowball

This method means prioritizing all your outstanding debts by paying off the smallest one first. When you’ve done that, you move on to the second-smallest debt, and so on, and so on. As the name describes, you slowly make larger and larger payments until you eliminate your debt. Pay attention to which loans have lower interest rates when choosing which debt to prioritize.  

Debt avalanche

This is the opposite of snowballing. Instead of starting with your smallest debt, you pay off your most significant debt with the highest interest rate. Typically, with “avalanching,” you see results faster. 


Setting up automatic payments is a foolproof way of paying your bills. The credit card company receives your payment immediately, alleviating the stress of missing due dates. 

Tip #2: Consider a debt consolidation loan. Simply put, debt consolidation means that you take out another, larger loan to pay off a series of smaller loans. You’ll deal with lenders because all your debts are combined, and you’ll only need to make a single monthly payment. There are a few ways to go about doing this. 

With a balance transfer credit card

This entails transferring all of your credit card debt onto a single card. Ideally, you’ll want to apply for a card that offers a zero percent introductory period. Then you won’t immediately need to worry about interest charges and can focus on managing your debt instead. 

With a personal loan

Even though you’ll also have to pay interest on this loan, the fees associated with a personal loan are notably lower than credit card loans. 

Tip #3: Work with creditors. It never hurts to contact your credit card issuer and see if they’re willing to negotiate better terms. You have a good chance if you’re a loyal customer with good credit behavior.

Tip #4: Seek help. More specifically, it may be wise to seek help from a financial advisor and take advantage of their expertise. 

Debt management plan

Credit counselors will reach out to your credit issuer through the funnel of a non-profit credit counseling agency to re-establish better terms on your behalf. However, you’ll have to pay the agency a flat rate for their services every month.


Filing for Chapter 7 bankruptcy means that all of your credit card accounts will be wiped clean. Chapter 13 bankruptcy means you’re permitted to reorganize your debts and develop a proficient payment plan over four to five years. The latter doesn’t completely strip you of all your assets. Remember that bankruptcy can remain on your credit report for seven to 10 years. 

Debt settlement

Third, a debt settlement means that your credit company agrees to accept less than what you originally owed. Usually, this isn’t a viable option. 

This is where options like Point Card are extremely viable. With Point, you aren’t obligated to pay interest fees, and since you are handling your own funds instead of borrowed money, you won’t have to rely on negotiations to try and sort out your debts.

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Point Editorial
A group of writers, thinkers, & designers from varying backgrounds — all part of the PointCard team. Sharing perspectives on concepts in design, finance, and culture through an everyday lens.
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