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Credit card debt is an increasingly severe problem in the U.S. As Americans become more dependent on their small plastic cards, the amount of debt seems to just get bigger. And bigger.

According to Experian , the average American has a credit card balance is almost $6,200. Along with individual and household debt, the total amount of credit card debt in the U.S. has reached its highest level ever.

Whether debt has got you down, or you’re wanting to consolidate your existing credit cards and opt for ones that have the best perks and benefits for your circumstances, the question of canceling a credit card can be an extremely sticky one.

Many of us find ourselves wondering the best course of action to reduce credit card debt without affecting credit score, and the concern is valid.

While closing an account may play a role in getting a better handle on any existing debt, it’s important to understand ways to cancel a credit card in a way that doesn’t end up setting you back even more.

Ahead are some common steps that are typically needed to be taken in order to fully cancel a card, including sending a written confirmation and keeping a watchful eye on your credit report after you’ve put through a cancelation request.

Do You Really Need to Cancel?

It can be tempting to cancel cards or close accounts when things get overwhelming. But sometimes this may not be the best option.

In many cases, canceling a credit card can actually damage one’s credit score. In fact, canceled accounts may remain on a credit history for several years after the date they are closed. (With a card in negative standing, it will remain on your credit history for up to seven years, and a cancelled card in positive standing typically remains for 10 years.)

It’s important to take the time and analyze your motivations behind canceling an account before you actually do. After all, it may be smarter to simply cut up or hide a credit card rather than officially canceling.

As always, the decision is up to you, but it’s helpful to take these considerations into account before finalizing a decision that may have a long-lasting impact on your credit health and your long-term financial future.

Closing One Account at a Time

If you’ve decided that canceling your card is the best way to go for you, there are some things you may want to keep in mind before getting started.

First of all, when it comes to canceling credit cards, it’s important to remember that not all of them are created equal.

Depending on the exact reasons that led you to wanting or needing to cancel a card, you may want to consider a few things before pulling the trigger.

For example, if you’re thinking of canceling a card, you may want to consider canceling new ones instead of old ones to avoid impacting your credit score.

In the world of credit, older, more established credit in good standing is looked upon more favorably than new, and so you may want to keep this in mind when choosing which card you would like to cut.

On top of this, some credit cards may offer more appealing rewards programs for your lifestyle than others, so you may want to take stock of the perks that come with each card before deciding which one you want to stop using.

Paying Off or Transferring Your Balance

Depending on the total amount of credit you have available, closing a card account with a high credit limit could run the risk of damaging one’s credit score.

If you are carrying high balances on other cards or have active loans, this damage could be especially noticeable, since your debt-to-credit ratio (also called your credit utilization ratio) may affect your credit score. (Typically, you’d want to stay at 30% or below.)

If you’re planning on canceling a credit card, you will likely want to ensure that you’ve paid off any remaining balances on that account. If you fail to do so, you may end up having to pay interest charges on any remaining balance.

If you normally carry a balance from one month to another, you may need to take extra care to pay the full statement balance before canceling a card in order to make sure there is no money left in your balance and avoid future interest charges.

You may also want to take some time to brush up on your knowledge of credit card utilization, as it can be important to understand when it comes to canceling your credit cards smartly.

In order to lessen the negative impact of closing one of your credit card accounts, you may want to pay off all of the balances you carry on all of your cards first.

If you cancel a card while carrying zero balances on all your cards, your credit utilization rate should stay at zero, so even if you cancel a card and remove its balance, your rate shouldn’t be impacted.

Contacting a Credit Card Company

Once you’ve paid off your credit card balance, you will want to contact your credit card company to put through your request to close your account.

Sometimes, you will be able to cancel a credit card without making a phone call. It may be helpful to look up how to cancel a particular credit card online to see if your credit card company offers this option.

In most cases, you will want to contact your credit card company by phone. Usually, your customer service number will be printed on your credit card.

From there, you’d inform your credit card company that you are canceling your card. Keep in mind that some companies require you to speak to a customer service representative in order to complete this process, while others are more flexible.

It’s helpful to know that credit card representatives may be trained to try to convince you to keep your account open. Remember that you have the right to close your account at any time.

Before you hang up the phone, you may want to ask your representative for their name so that you can include it along with your written notice of cancelation.

Sending Written Confirmation

Once you’ve called and canceled your card, you may choose to mail a written confirmation letter to your credit card company. This can be a good option in order to protect yourself generally, but also in the event that the customer service representative made a mistake while putting through your card cancelation request.

In the letter, you would write things like your name, phone number, address, and account number as well as the details from the call you had with your credit card representative. If you got their name, you may want to also include it here.

You might choose to also state that you’d like your credit report to show that the account was closed at your request.

If you choose to mail a letter, consider sending it via certified mail so that you can ensure the company receives it, and make sure to keep a copy for your records.

Keeping an Eye on Your Credit Score

When canceling credit cards, patience is key. From the moment you begin the process to the moment your credit card is officially canceled, it may take one month or even longer, depending on the company.

After your account has officially been canceled, you may wish to keep tabs on your credit report to ensure that your credit card has in fact been listed as closed.

If, for some reason, the card is still marked as open, you may need to get back in touch with your credit card representatives and, possibly, repeat some or all steps in this process.

Know that it can sometimes take several weeks for changes to show up on your credit card report. For this reason, it’s good practice to get into the habit of checking your credit score regularly, whether or not you’ve recently closed a card.

Of course, if you did just cancel a card, you may want to wait a month or so to see whether or not closing your account impacted your credit score.

Keep in mind that, every twelve months, you can get one free copy of your credit report online through AnnualCreditReport.com . Some credit card companies may also offer apps that allow you to check your score for free.

Destroying Your Card

Once you’ve confirmed that your card is canceled, then you’re almost done with the process.

If you’ve ensured that the account is in fact closed, then you can officially destroy your card in the manner of your choosing.

Though cutting up a credit card may provide a feeling of freedom and catharsis, it’s important to be careful to choose a method that makes sure the information on your card is not recoverable.

If you have access to a shredder, shredding your card may be the most efficient and secure way of destroying it.

If you’re using scissors, make sure that you properly cut up all the identifying pieces of information on the card, including your signature, the expiration date, CVV number, and the credit card number itself.

From there, ensure you properly dispose of the shards. For an added layer of security, consider throwing them away in more than one garbage can.

Maintaining a Healthy Relationship with Credit

Despite the array of credit card-related woes many Americans experience, it is possible to leverage credit cards in a healthy and productive way.

Depending on your needs and financial circumstances, finding ways to use credit to your advantage is a great way to ensure that you don’t wind up with more debt than you can handle.

A credit card cancelation can often offer an opportunity to take stock of the way you’re using credit, and establish better practices moving forward.

Once you’ve familiarized yourself with your credit utilization, and taken a look at the rewards you are currently signed up for, you may choose to go about things differently in the future.

One of the best ways to help you keep tabs on your credit is to build a practice of checking your balance and your credit score regularly.

This may look like downloading an app that lets you see all of your savings, checking, and credit card accounts in one place, or just getting into the practice of logging into all of your account on a regular basis.

Whichever way you choose to go about it, there are several strategies you can try out that may help you to keep your credit in check.

From leveraging balance transfers to using the snowball method to help pay off any debt balances you currently have, there are ways to help you get your credit card debt and finances under control—regardless of whether or not you decide to get rid of some of that seemingly precious plastic.

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.

Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .

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SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

SOPL19079

You might have heard the phrase “there’s no such thing as free money.” You may also have heard that “money doesn’t grow on trees,” but we’re pretty sure money is still made of paper. While cash back from your credit card isn’t exactly free money, using credit wisely can be beneficial.

How Does a Cash Back Perk Work?

Cash back is the rebate of the credit card world. The money that you get back, depending on the card and the deal you’ve gotten, may come in the form of a check, statement credit, or deposit with your financial institution.

With points, you might end up with $10 off your next Starbucks purchase; but you might actually prefer The Coffee Bean and Tea Leaf, so a Starbucks card may hold no value for you. With a cash-back reward, you typically get to decide how you want to spend the money: your mortgage, your lunch, your boyfriend’s birthday present, or even your credit card debt.

While some credit card companies offer a flat cash-back rate, other cards offer some combination of a flat cash back rate, and a specialized cash back rate for certain categories (often ones you can choose).

Card holders may be eligible to receive varying amounts—typically a percentage of spending in a certain category, e.g., dining, hospitality, airlines, or groceries.

But choosing a cash-back card with the best rewards isn’t so simple. There are many different kinds of cash-back rewards which may be available.

What’s Available

•   Cash back on a monthly, quarterly, or annual basis.

•   The cash back could be for any kind of purchase or for particular purchases in certain categories like dining, gas, groceries, etc. Sometimes it might be a combination of these two with higher rates of return on certain categories.

•   Timed spending bonuses: If you spend a certain amount within a certain prescribed time you may be eligible for even more cash back than the base amount.

•   Certain cards might also offer non-cash benefits like flight upgrades or extended warranties on purchases made with that card.

Why Do Cash Back Rewards Even Exist?

How is this even possible? Getting paid to spend money sounds like the kind of job you invented when you were twelve—it couldn’t possibly be real.

It turns out that the money you’re getting back comes from some very real places. Of course, credit card companies will try to get you sign up with them instead of their competitors. It’s dog-eat-dog out there. Credit card companies have since come up with a variety of tools to attract customers, and cash back is a common reward.

But where does the money come from? If you’ve ever been asked to fulfill a credit card minimum purchase amount you know where it comes from. The $10 minimum at the cafe is not there entirely to keep you adding extra shots to your morning latte (although you’re totally going to anyway).

The Pros

With so many kinds of credit cards out there, why would you consider a cash-back card?

•   Credit cards with cash-back rewards might actually help you earn more money than a low-interest-rate checking account with a debit card. Some checking account interest rates can often be less than 1% APY. Getting 5%—or more—cash back on your purchases is a lofty difference. Credit card spending, though, is still spending—not saving—an important difference to keep in mind when making purchases. Buying within a budget is still an important consideration.

•   Some cash-back cards offer sign-up bonuses or bonuses for spending over a certain amount or in a certain categories. When used responsibly, these types of bonuses could be used for special purchases a buyer might not have been able to afford otherwise. Two tickets to Paris please!

•   Consumers with credit scores of 740 and higher are typically the ones who qualify for cards with the highest cash-back rewards, which could be up to 6% when purchasing items from designated categories. Yet another reason to pat yourself on the back for your high credit score.

The Cons

Okay, so maybe some of the maxims are correct. Nothing in life is free and money doesn’t grow on trees. Like anything good in life, there can be a downside (we’re looking at you, cupcakes).

•   Many cash-back programs actually come with a maximum on rewards. While it seems that the more you spend the more you get, eventually you might just be spending more.

•   Some cash-back credit cards have annual fees. While this may seem small compared to the money you’ll be getting back, it might be worth it to do the math and make sure the pros outweigh the cons before you are convinced that this card is worth your spending power. Some cards with hefty fees reward the cardholders with perks beyond the cash-back bonus.

•   Like any other credit card, if the balance due is not paid on time, there are typically interest charges and fees added to the principal balance. That amount may negate any cash-back rewards you earned during that statement cycle.

•   Perhaps the biggest con: Choosing and managing a credit card can be complicated. Lots of homework, (i.e., research online, with your bank, has to go into this one before you may feel ready to commit to this endeavor. With occasional fees and sometimes hard-to-acquire gains, your research is key to making sure you find one that works for your spending habits. Cash-back credit cards can pay off, but it might take some digging to find the right one.

Unfortunately, at the end of the day, there’s no free lunch. Credit card companies are in the business of making money and they rely on your debt to fund their businesses.

Using credit wisely—and reaping all the rewards—typically means paying the balance due in full each billing cycle. Getting to that point can take some time, though.

New and existing Checking and Savings members who have not previously enrolled in direct deposit with SoFi are eligible to earn a cash bonus when they set up direct deposits of at least $1,000 over a consecutive 25-day period. Cash bonus will be based on the total amount of direct deposit. The Program will be available through 12/31/23. Full terms at sofi.com/banking. SoFi Checking and Savings is offered through SoFi Bank, N.A. Member FDIC.

SoFi members with direct deposit can earn up to 4.00% annual percentage yield (APY) interest on Savings account balances (including Vaults) and up to 1.20% APY on Checking account balances. There is no minimum direct deposit amount required to qualify for these rates. Members without direct deposit will earn 1.20% APY on all account balances in Checking and Savings (including Vaults). Interest rates are variable and subject to change at any time. These rates are current as of 3/17/2023. Additional information can be found at https://www.sofi.com/legal/banking-rate-sheet



Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

SOPL19062

There’s nothing quite like the feeling of having your credit card balance paid in full. It’s like a breath of fresh air, a surge of pride, and a huge sigh of relief all rolled into one. But Americans have an on-going love affair with plastic.

Collectively we hold more than $1 trillion in credit card debt. When it comes to getting rid of credit card debt, baby steps can lead to big victories—even the possibility of getting those credit cards paid off in 2020.

To be clear, we’re not talking about being completely debt-free in 2020. Depending on how much you owe on all your debt in total, that could be a longer journey. But targeting your credit card debt can be a smart first-step since credit card debt can sometimes come with a high interest rate.

We’ve put together eight common strategies for how to get rid of credit card debt. But first, you’ll need to get your head in the game. Unless you suddenly receive an inheritance or win the powerball, unloading debt can be challenging.

If you truly want to try and eliminate credit card debt in the new year, it’s going to require a lot of budgeting, discipline, and will-power. You’ll likely have to make sacrifices and compromises. But if you can keep your eye on the prize, next year you could be looking at a nice, round zero.

1. Limit Your Use of Credit

No strategy for how to crush credit card debt is going to work if you continue to rely heavily on your credit cards. Pick one card to keep—ideally, one with good terms, like a low interest rate or a great rewards program —and put the rest away.

You can store them in a safe place or even cut them up so you’re not tempted to use them. If the card doesn’t carry a large annual fee, consider not canceling your credit card account, since losing that cards credit history or percentage of credit utilization could possibly have an affect on your credit score.

2. Take a Hard Look at Your Spending

Go through last month’s bank and credit card statements and add up all the money you spent eating out, or shopping for non-essentials. You may be surprised at what you find.

Review your spending closely and see if there is any room for you to cut back on unnecessary expenses. Then, create a budget that’s completely within your means.

The goal is to cut back on your discretionary spending so you can focus additional funds on paying off your credit card debt. Take a look at our tips for creating a better budget. Building a workable budget is one of the first steps in tackling your debt.

3. Create a Debt-Repayment Strategy and Stick to It

There are a few different schools of thought when it comes to eliminating your credit card debt, especially if you have debt spread over multiple credit cards. Regardless of the strategy you choose, make the minimum monthly payments on all of your debts.

One strategy is called the debt avalanche method. Using this method you’ll organize your credit card debt from highest interest rate to lowest interest rate.

Focus your efforts on repaying the debt with the highest interest rate first. Then as you pay off each credit card, you can contribute the money you were contributing to the next debt.

On average, Americans will pay more than $1,000 in interest this year, so tackling the highest interest rate first could be appealing. You can use our credit card interest calculator to see an estimate of how much interest you’ll accrue on your current track.

The other approach suggests you focus on the credit card with the smallest balance first. This is called the debt snowball method. The goal of this strategy is to encourage you to continue your debt repayments. Since you start with the smallest balance, you’ll start seeing the impact of your payments faster.

6. Transfer to a Balance Transfer Credit Card

This could help you toward your goal of eliminating your credit card debt but in order to do so it will require diligence to avoid common pitfalls.

A balance transfer credit card allows you to open a new low-interest or interest-free credit card and transfer your existing balance from a high-interest credit card, so you can pay off the debt. In theory, paying off the debt should be easier without a high APR.

The introductory APR on low or 0% transfers generally lasts anywhere from six to 18-months, so be sure you understand the terms and conditions. These can be a useful tool if you can repay your debt during the introductory period.

7. Consolidate Your Debt with a Personal Loan

A personal loan won’t eliminate your debt, but it could help you get out of the high-interest credit card game. Instead of a revolving door of debt, you can opt to pay one monthly fixed payment, possibly at a lower interest rate.

8. Pay More than You Owe, More Often than You Owe It

As you work toward paying your credit card debt, consider making more than the monthly minimum payments. This can help you pay off your debt faster and in doing so, could help you reduce the amount of money you spend in interest over the life of the debt. This can be helpful in both the avalanche and snowball methods of debt repayment.

Ready to see how consolidating your credit card debt with a personal loan could help you take control of your finances? SoFi can help. Use our personal loan calculator to compare your current debts with a personal loan.

When you take out a loan with SoFi there are no prepayment penalties or origination fees. You’ll also gain access to a community of like-minded savers.

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.

Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

SOPL19020

About 10% of Americans moved within the country last year, according to the U.S. Census Bureau. Though that number may seem small, its actual value is not—that amounts to an estimated (and whopping) 32 million people.
Within that group, the impetus for moving varied, from people moving in order to establish their own household, opting for a more affordable home or moving for a new job.

While the prospect of a new home can be exciting, the move itself can require a surprising amount of time and money. Unless you have a family or friend group ready and willing to pack your things, haul your boxes, and load your belongings into your new space, chances are you will hire a professional moving company to assist you with the above tasks.

Just as you make a weekly or monthly budget in order to see your finances clearly, it can be helpful to crunch the numbers on the cost of a move before you get started. One question worth considering before you cross hire movers off your to-do list is, how much do professional movers cost?

The short answer is—it depends. There are a variety of factors that will influence the cost of hiring professional movers. Below is some information that might help you prepare mentally and financially for a big move.

Making a Local Move

While moving across town might seem straightforward, it can be a drawn-out process—though a more affordable one—if you’re doing some of the legwork yourself. Keep in mind that unless you’re taking vacation days to pack and move, you may be filling boxes on nights and weekends for a while.

The upside of packing (and later unpacking) your own stuff is that you’re paying zero dollars to a moving company for those hours. That means you need only need a standard moving service. Once your boxes are taped up and ready, a moving company can come to load boxes and furniture into a truck, transfer them to your new neighborhood and unload them into your new space.

Costs for a standard move like this will depend on a few key factors, including the amount of stuff you have, the distance you are moving, and the number of hours it takes movers to move your things. (Because quantity matters here, it can be a good idea to use a move as the impetus for donating things you no longer want or need.)
To get an idea of how much movers cost for a local move in your area, gather estimates from a few companies. Most offer a free quote, and there are websites like QuoteRunner that aggregate moving quotes for local companies based on a few moving details provided by you.

By comparing the prices of local movers, the Unpackt Blog estimated the average moving price for a standard move in various cities. In each location, the blog shows how the size of your current home impacts the cost.

In New York City, for example, a local standard move for someone in a large one bedroom might cost around $350, while a four-bedroom move could cost more than $1,000. Keep in mind this is simply transporting packed boxes from Point A to Point B. The blog gathered moving data and estimated local costs for cities such as Raleigh , Baltimore , and Minneapolis .

A full-service move includes a good deal more assistance from your moving company, but for a greater price. The higher price is because this service covers just about everything.

You can opt to have your movers pack your things, disassemble (and later reassemble) all your furniture, load and unload everything, then unpack it for you, with your guidance as to where things go. Full-service movers also usually take care of packaging supplies and their disposal.
According toMove.org , the cost of a full-service local move will range between $550 and $12,000. Again, the price range varies so greatly because it depends on the number of belongings the movers will be packing and transporting.

It might help to compare and contrast a few different moving companies, Moving.com suggests reviewing at least three. This can help you make the best pick for your move and budget. Some movers will tell you a cost per hour for moving, but it can be hard to estimate just how many hours a full-service move will take since so many processes are included.

An additional note for your budget: Consumer Affairs says that tipping movers is customary, so maybe plan to tack on an additional $20 to $40 per day, per mover. So if you’ve got three movers helping you across two days, gratuity could range from $120 to $240.

Moving Out of State

The American Moving and Storage Association (AMSA) found that about 650,000 Americans use professional movers for an interstate move—that means they leave one state for another.

Some of those folks—about 39% of them, actually—don’t pay for their own moves, thanks to corporate sponsorship, which sometimes foots the bill if you’re moving for a job. About 44% of interstate moves are paid for by individuals. Military and other government-sponsored moves make up the rest.

If you’re an individual moving to a new state, know that your moving costs will likely depend on three primary factors, similar to a local move: the weight of your shipment, the mileage your belongings will be transported, and labor costs outlined by the moving company you’ve chosen.

Free cost calculator City to City can help you estimate your move. Users enter their Point A and Point B, and can also select premium services to see how that impacts price.

For example, using that calculator, a move from Los Angeles to Denver—about 830 miles—with about 3,500 pounds of belongings and including packing services might cost around $2,500.

A move from Los Angeles to Chicago—about 1,750 miles—with the same specs might cost around $3,300 miles.
Keep in mind that the weight of your belongings may need to be altered. Some say to estimate that each furnished room in your house contains weighs about 1,500 pounds.

Financing a Move

If you already have a clear picture of your personal budget, it may be simple to tell whether you need to do more of a do-it-yourself move or if you can spring for a full-service move through a professional moving company.

Some people might opt to use a credit card to pay for moving fees. If you go this route, consider keeping your card interest rate in mind. If you can’t pay off your incurred moving costs fairly quickly, remember that interest will rack up, potentially making your move more expensive in the long run.

Another way to pay for a move is with an unsecured personal loan, which may come with a lower interest rate than your credit cards. You can check your interest rate for a personal relocation loan through SoFi online and within minutes.

If you qualify, this loan gives you access to cash (usually in less than a week), which may come in handy if your mover offers a discount for an up-front cash payment. You can also use a personal loan to help pay for other moving-related costs that can come up, such as first and last month’s rent for a rental unit.

Ultimately, a move can be a fresh start and offer a new perspective on life. Paying for that fresh start in a way that best suits your budget can help make this life transition go smoothly.

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

SOPL19062

Illness and injury are an unfortunate (and scary!) fact of life, but once you’re patched up after surgery or a lengthy hospital stay, you want to focus on your recovery, not worrying about how on Earth you’re going to pay off any medical debt.

Medical debt can be overwhelming, and according to a 2018 study published by Health Affairs, it’s not just older Americans who are managing debt from medical bills.

It is actually Millennials who are racking up the most medical debt—11% of all people who had a medical bill go to collections in 2016 were just 27 years old. So how can you pay off medical bill debt and hopefully stay out of collections? There are several different options available that may help you manage your medical debt with minimal pain, so you can focus on feeling better.

Before we dive in, we should mention we realize the nature of medical debt is often very sensitive. These strategies are merely a collection of tips and commonplace ideas found through our research on the internet.

This article shouldn’t be considered advice in any sense; every person’s situation is unique, which means it’s always a good idea to check in with a professional before taking action yourself. With that said, let’s dive into what we found.

Medical Debt Payment Plans

Medical care can be expensive, especially if you’re facing a chronic condition with ongoing costs or a major surgery or hospital stay. One plan of action you might consider is contacting your medical provider to see if they offer payment plans.

Some providers offer payment plans that allow you to make payments on your medical bill over time, paying it off in installments. Talking to your healthcare provider or a hospital billing department can be a great first step to figuring out if there is a payment plan you can take advantage of when it comes to medical bill debt.

Of course, one major downside to payment plans is that not all medical providers or medical offices offer payment plans and may require full payment when services are rendered.

Likewise, some medical providers may only let you set up a payment plan in advance, which means that a payment plan might not be a solution for any medical debt you’ve already accrued. And of course, some payment plans may still be too prohibitively expensive to pay every month, even if you’re paying over time.

Using A Medical Credit Card

If you’re looking at a medical bill that you can’t pay out of pocket, you may be tempted to reach for a credit card. Before you hand over whatever card is in your wallet, you might want to consider looking into credit cards specifically designed to be used to pay for medical care.

Medical credit cards sometimes offer low or no interest for a predetermined period of time, which means that you may be able to pay your medical bill with the credit card and then pay off the card before it accrues interest.

But be careful—if you can’t pay off the credit card before the interest-free period is over, you might face high-interest charges, which could actually end up making your medical bills more expensive.

Consider pulling out the calculator and doing some math to see if you can afford to pay off your medical bills during the interest-free period before you decide to put the costs on a medical credit card. This can help you determine how useful a medical credit card might be in your specific situation.

Negotiating Directly With The Hospital

If you’re facing a big bill from the hospital, one thing to consider is reaching out directly to the hospital billing department to see if you can negotiate the total amount of your medical bill.

While it’s not precisely like haggling for a used car, most hospitals have a financial department that might be able to help you determine if you qualify for any cost deductions or discounts.

One other thing to keep in mind is that cash might just still be king. Some hospitals and medical providers might give you a discount just for paying in cash. This can be a good option if you can afford to make the payments in one lump sum and want to avoid any extra fees.

Taking Out A Personal Loan

Taking out a personal loan might also be a solution to managing medical debt. While personal loans are often overlooked, they may offer more benefits than credit cards, like lower interest rates and more flexibility.

In order to use a personal loan to pay off medical bill debt, you’d borrow money from a lender which you’d use to pay your medical debt, then you’d pay that money back to the lender over time in regular monthly payments. Like other types of loans and financing, lenders generally look at your personal financial history and ability to repay (among other factors) when deciding if you qualify for a personal loan and determining your interest rate.

Unlike other types of financing, however, a personal loan can be used for almost everything—from paying off a hospital bill to paying for your groceries while you’re out of work due to an injury or illness.

If you’re wondering how to clear medical debt from multiple sources, a personal loan might help. You may be able to use a personal loan to consolidate numerous medical debts into one monthly payment. This could work by taking out a medical loan and using it to consolidate different medical bills, which allows you to focus on paying off just one debt instead of managing multiple varying deadlines every month.

When searching for personal loans to pay for medical debt, be sure to read the fine print. Some providers may charge origination fees to process your loan, or prepayment fees if you pay off your loan early.

Also be wary if interest charges in your search, as high-interest charges could add more money paid over the life of the loan.

One other potential benefit of using personal loans is that the application process is relatively simple and you can usually find out your eligibility pretty quickly. With SoFi personal loans, it just takes a few minutes to check your rate. And with SoFi, there are no fees required.

There’s no way around it—medical bills can be hard to deal with. But making a plan for repayment you help you get on your way to financial and physical wellness.

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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