To continue enjoying all the features of Navy Federal Online, please use a compatible browser. You can confirm your browser capability here.

Bottom Line Up Front

  • Carrying debt can cause financial strain and stress. Reducing debt not only improves your wallet, but your wellbeing and outlook as well. 
  • Some debt is good—like a mortgage that helps you buy an asset that can increase in value over time or a student loan that enables you to enrich your future.
  • Aim to make saving a priority, decrease unnecessary spending and prioritize paying down credit card debt.

Time to Read

4 minutes

May 2, 2022

What’s so great about being out of debt?

First, there’s the obvious: You'll have more money to save and spend if you aren’t stuck with paying off big credit card bills and other loans each month. Then, there’s another bonus: Reducing debt may improve your physical and mental health.

Researchers have long linked the stress from financial strain and credit card debt to chronic stress and even depression, which can impact your physical health. One 2021 medical study from the University of Missouri concluded that bearing unsecured debt, such as credit card debt, into middle age can even lead to specific problems such as joint pain and stiffness by age 50. The study also cites 2020 research that names debt as the culprit for “undermining physical and mental wellbeing.”  

To avoid the mental and financial toll that debt can cause, read on to learn more about responsible ways to work with lenders, establish a debt management plan and improve your financial situation.

Good Debt vs. Bad Debt

Understanding the difference between good debt and bad debt can help you make strategic decisions about your personal finances.

You see, not all debt is bad. For example, a mortgage can help you realize your dream of homeownership and help you purchase an asset that can increase in value over time. Student loan debt—within reason—may help you earn a degree that may lead to a well-paying job. Even a car loan can be positive if it means having safe, reliable transportation to help you get to work and school.

However, some kinds of debt can drain your financial power. According to the 2022 American Household Credit Card Debt Study, the average household has $6,006 in credit card debt carried month to month. That’s actually down 14% from the previous year’s study, but the potential interest owed and timeframe for paying off such a debt is sobering. According to, a credit card balance of $6,000 at an interest rate of 18%, with a 2% minimum payment, would take over 42 years to pay off. During that time, you’d pay $16,396 in interest on top of the original debt of $6,000. That’s a lot of money that could be better spent elsewhere!

Living (Mostly) Debt Free

Reducing your credit card debt load will not only help your stress level and give you more money to spend elsewhere; it also can improve your financial situation.

Having less debt could better your credit history, credit score and fiscal reputation in the eyes of lenders. You could get lower interest rates on secured debt, like mortgage loans and auto loans, if you use credit cards responsibly, which can save you money in the long term. Want to find out how to get rid of credit card debt? Here are 5 tips:

  1. Make saving a priority.  As part of your overall money management strategy, having a pool of savings for emergencies, vacations and major purchases means relying less on credit. Even $10 a week can add up over time. Navy Federal Credit Union offers a variety of savings accounts and tools that can help you maximize your saving plan.
  2. Establish a cooling-off period. Before you buy on credit, establish a waiting period. Walking away for a specified time period, whether it’s a couple of hours to a few days, can help you determine if your desired purchase will help you reach your goals or postpone them.
  3. Try the “avalanche method.” If you have multiple credit card balances, pay off the one with the highest interest rate first while continuing to pay the minimum each month on other credit cards. Once that balance is paid off, add what you were paying to the next card’s payment and so on. 
  4. Reduce extra store credit cards. If you have multiple store credit card accounts, it’s easy to charge a little here and there and rack up balances without realizing it. Instead, create a repayment plan to pay them off. Then, consider using only one card with a low interest rate in the future. 
  5. Consider debt consolidation. You may be able to reduce your total monthly expenses and interest payments by combining debt into one loan. Consider a personal loan or a balance transfer to a card with a low interest rate. Keep in mind that any type of debt consolidation loan simply transfers the debt. You’ll still have it, but this option may help with debt management and debt reduction over time.

Debt Management

Another way to manage your debt is to refinance loans you currently have, like student loansauto loans or even your mortgage. If you refinance to a lower interest rate, you could save on your monthly payments and apply that savings toward paying off other debts.

We’re Here for You

If you need some help figuring out how to reduce your debt load, Navy Federal offers confidential personal financial counseling to members.  Contact us to start improving your finances with Navy Federal.

Key Takeaways Key Takeaways


This content is intended to provide general information and shouldn't be considered legal, tax or financial advice. It's always a good idea to consult a tax or financial advisor for specific information on how certain laws apply to your situation and about your individual financial situation.