The average cardholder now owes $6,595 in revolving balances, Capital One’s analysis confirmed. Annual percentage rates hover near 21%, Federal Reserve data showed, turning everyday purchases into years of compounding interest.
Bank of America’s Better Money Habits platform outlines a structured debt-elimination framework that features two competing strategies and requires no advisors or special products.
The approach requires no upfront costs and relies solely on credit card payments already expected from borrowers.
Bank of America breaks down ways to target credit card balances
The strategy starts with a rule many cardholders overlook: always cover the minimum payment on every card, then direct all extra cash toward one account.
Bank of America calls the first option the high-rate method, also known as the avalanche method, which targets the card carrying the steepest interest rate before moving to the next.
The second approach, known as the snowball method, changes the priority by targeting the smallest balance first, regardless of the interest rate attached to it.
Once a card reaches zero, the freed-up payment rolls over to the next-smallest debt, building momentum with each account eliminated, the bank’s guide explains.
Both approaches share a demand for consistency, but they appeal to different psychological profiles among people carrying multiple balances simultaneously.
The high-rate path minimizes total interest costs over the full life of your debt, while the snowball path creates faster visible victories that sustain motivation.
“For people who are more math-driven and want to save the most money, the avalanche method makes sense,” Corey Davis of Mattson Financial Services explained to Scripps News.
“But for people who want the motivation of seeing accounts closed, the snowball method can work better.”
Paying more than the minimum changes the repayment math
The bank highlights a detail that card issuers are legally required to display on every monthly statement: the true cost of making only minimum payments.
Your card company must chart how long repayment takes at the minimum compared with a higher fixed amount, and the difference is often larger than many borrowers realize.
With the average annual percentage rate nationally at 21%, every additional dollar sent above the minimum goes directly toward reducing your principal balance.
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As the balance falls, less of each payment goes toward interest, and more goes toward the principal, helping borrowers pay off debt faster.
Americans collectively owed $1.25 trillion in revolving credit card debt during the first quarter of 2026, a figure 5.9% higher than a year earlier, according to Federal Reserve Bank of New York data.
Bankrate Senior Industry Analyst Ted Rossman found that fewer than half of cardholders carrying a balance even have a formal payoff plan in place.
“For millions of American households, credit card debt represents their highest-cost debt by a wide margin,” Rossman said in a January 2026 Bankrate survey.
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How consolidation, balance transfers fit into Bank of America plan
The Bank of America guide also addresses a third strategy that works alongside either repayment method: moving multiple high-rate balances onto a single lower-rate account.
A balance transfer shifts existing debt to a card with a promotional interest rate, often 0%, for a window of 12 to 21 months.
Minimum payments could keep you in debt for decades and cost you thousands of dollars in interest.
Transfer fees typically range from 3% to 5% of the total amount transferred, and the bank cautions cardholders to weigh those costs against projected interest savings.
Homeowners carrying equity have an additional option, because a home equity line of credit may offer a substantially lower rate than standard credit cards.
Spending cuts and windfalls give cardholders a faster path to zero
The guide encourages cardholders to sort monthly spending into categories such as groceries, transportation, housing, and entertainment before identifying realistic areas for reduction.
Fixed costs like cell phone plans and auto insurance also deserve review, the bank noted, because even modest cuts in recurring expenses free up repayment dollars.
Financial windfalls like tax refunds, work bonuses, or salary increases offer another acceleration tool when committed entirely to debt reduction rather than added spending, the bank also recommended.
Adam Olson, a certified financial planner, reinforced that principle in guidance published by Mutual of Omaha.
“When you’re dealing with credit card debt, discretionary spending has to be reevaluated,” Olson said. “Subscriptions, takeout, and convenience purchases aren’t necessities; they’re choices that can delay real financial progress.”
Elevated interest rates leave cardholders with no room to wait
The Federal Reserve held its benchmark rate steady at its January, March, and April 2026 meetings after cutting three times in late 2025, Finder noted.
Cardholders who expected rate relief to ease their burden have not received the help they anticipated, and further cuts appear unlikely in the near term.
Rossman noted that whether the average rate lands at 21%, 20%, or 19%, each figure represents historically expensive borrowing costs for revolving consumer debt.
Davis also warned that cardholders making only minimum payments at current rates could spend 20 to 25 years clearing their balances, FOX17 reported.
The Bank of America framework centers on three steps, according to the bank’s guide: choosing one repayment method, adding dollars above the minimum, and consolidating where transfer fees justify the move.
The bank notes that the approach requires no specialized financial knowledge and recommends that cardholders track their progress and direct any extra payments toward whichever card their chosen method prioritizes.
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