Consumers are piling up credit card debt again, prompting concern that some are taking on more than they can handle. 

Two big credit card issuers, Discover and Capital One, have begun reining in the amount of credit extended to some of their less creditworthy customers, according to The Wall Street Journal. The move comes as outstanding credit card debt reached a record $1.021 trillion in June, according to the credit reporting agency Experian.


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“I think this is a smart move by Discover and Capital One, especially since those two companies have a lot of customers with lower credit scores and lower incomes,” says Ted Rossman, an industry analyst at CreditCards.com. “Consumers need to make sure they can repay their debts under all economic conditions, not just the best case scenario.”

If you’re carrying a large credit card balance, now would be a good time to take a look at your own spending. In fact, doing so could be one of the smartest investments you can make.

“Being charged interest at a double-digit rate is a killer,” says David Schneider, a certified financial planner and founder of Schneider Wealth Strategies in New York City. “Paying it off is the same as earning a double-digit rate of return.” 

Paying Off the Debt

Here are some strategies for tackling an unpaid balance:

Use your good credit. If you have a credit score of at least 700, try to wrangle a better deal, says Greg McBride, chief financial analyst at Bankrate.com. Some cards currently offer balance transfers that charge no interest for 18 to 21 months. That’s a long “free” stretch to tackle paying off your debt. Most transfer deals hit you with a 3 to 4 percent transfer fee, however. So McBride suggests contacting your current credit card issuer and saying you'll transfer unless it gives you a lower rate. Then compare the cost of the transfer with the cost of paying off your current card at the new, lower rate.

Trim your expenses. If you're overwhelmed by owing thousands of dollars on a credit card, focus instead on trimming your spending. Add up your expenses and you might find $50, $100, or even more that you can cut per month. That's going to be a big help in paying down your balance.

Tap your savings. It never makes sense to empty your emergency savings, but if you have more than you need (usually three to six months of living expenses), use some of the extra money to pay down your credit card balances. It's probably earning just 1 percent or less in a bank account, and if you can use it to pay off debt at an interest rate of 15 percent or more, that's a big payoff. Schneider says that cash in a brokerage account might also be used to pay off a credit card balance.

Work it off. “Nobody wants to hear this, but bringing in more income is a great way to tackle your credit card debt,” says McBride. Size up how quickly you could be out of debt if you earmarked 100 percent of overtime pay, income from extra projects, or income from a second (temporary) job to paying off your balance.

Refinance at a lower fixed rate. If you have a strong credit score, you might be able to lock in a fixed interest rate well below 10 percent with a personal loan from an online lender such as Prosper, SoFi, and Discover.