TULSA, Okla. — Beto Padilla loves taking his 2-year-old to the park.
He said he can do that now because he spent two years climbing out of a financial hole that millions of Americans know all too well.
"In my early years I had all the credit cards, anything you can think of. I maxed them out and got into debt," Padilla said.
His solution was straightforward but demanding: he worked two jobs. One to pay his regular bills, and one to pay down the high interest piling up on his credit cards.
Now, Padilla keeps it simple.
"If I don't have cash in my little wallet, there's no shopping, no credit, no credit cards," Padilla said.
When asked why he avoids credit cards, his answer was direct.
"Interest. That's what they want, they want to keep you paying them off all that interest credit cards, no cash in my pocket, no shopping," Padilla said.
Americans pay a staggering amount in credit card interest every day
Padilla's instinct to avoid interest is backed up by hard numbers. Certified Management Accountant and author Dmitri Maxim puts the national cost in stark terms.
"Americans hand over around $700 million a day in the credit card interest $700 -- million a day just interest," Maxim said.
Maxim says a good way to understand just how difficult it is to escape high-interest credit card debt is to look at what happens when you only make the minimum monthly payment on the average American's credit card balance of $6,500.
"The minimum payment can stretch the debt for roughly 2 decades. The interest can cost more than the original purchase," Maxim said.
For those who cannot find a way to bring in more money, Maxim says there is another path.
"If you cannot increase your income in order to to service your debt in order to pay it off, then you have to cut on your expenses," Maxim said.
Strategies to help you get out of credit card debt
Whether working a second or even third job to increase your income is realistic for you or not, financial and consumer protection experts outline several approaches to tackling credit card debt.
- Build a budget and attack the balance Start by gathering your pay stubs and bills to build a realistic monthly budget. Track everyday spending and put any extra income toward your balances. Two common methods are the debt snowball, which focuses on paying off the smallest balance first for quick wins, then there is the debt avalanche, which targets the highest-interest card first to save the most money over time.
- Call your credit card company directly Before your account goes to collections, call your credit card company and explain your financial hardship. Ask for a modified or lower payment plan. This is something you can do yourself for free, without paying a third-party service.
- Work with a nonprofit credit counselor A reputable, nonprofit credit counseling organization can help you manage your money and may enroll you in a Debt Management Plan, or DMP. Through a DMP, the counselor consolidates your payments and works with your creditors to lower your interest rates.
- Consider debt consolidation Taking out a single personal loan at a lower interest rate to pay off multiple credit cards leaves you with one monthly payment and can reduce the total interest you pay.
- Understand the risks of debt settlement Debt settlement companies negotiate with creditors to accept less than what you owe, but the Federal Trade Commission warns this approach can damage your credit score, carry high fees, and lead to missed payments. The FTC specifically cautions consumers never to pay a debt settlement company upfront before they have actually settled your debts.
- Bankruptcy as a last resort If your financial situation is severe, Chapter 7 or Chapter 13 bankruptcy can eliminate most unsecured debts. However, bankruptcy can have a serious, long-term impact on your credit and should be considered carefully.
For more guidance, the FTC offers a full How To Get Out of Debt guide at consumer.ftc.gov.
Padilla says the hard work of getting out of debt was worth every sacrifice, especially since it means he can now spend more time with his son instead of working two jobs to pay off credit cards bills.
This story was reported on-air by a journalist and has been converted to this platform with the assistance of AI. Our editorial team verifies all reporting on all platforms for fairness and accuracy.
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