LEILA FADEL, BYLINE: A lot of folks, about 46% of respondents to a recent bank rate survey, are carrying a balance on a credit card from month to month. And that's understandable as price increases make it harder to just get by. NPR's Life Kit created a special newsletter series to help people tackle credit card debt, and Life Kit host Marielle Segarra is here today to share some commonly held myths on this topic. Hi, Marielle.
MARIELLE SEGARRA, BYLINE: Hi, Leila.
FADEL: OK. So you say the first myth is that if you're in credit card debt, that means you're bad with money or you have a spending problem.
SEGARRA: Right. A lot of people think that, but that is very often not the case. The truth is that a lot of people get into credit card debt because of a rogue wave that hits their lives, right? They had a medical emergency or their...
FADEL: Yeah.
SEGARRA: ...Car broke down, their roof started leaking and they just didn't have the savings to pay for it. And also just because of how our economy is structured, a lot of folks have to take on debt to pay for basic living expenses. So it doesn't mean they're bad with money.
FADEL: It just means they don't have enough money.
SEGARRA: Yeah, exactly. Exactly.
FADEL: Yeah. I think so many people take on debt for not fancy things - right? - like basic living expenses. So what's the next myth?
SEGARRA: A lot of people have been told that it's a bad idea to have a credit card because they grew up in a family that struggled with debt or they're just afraid that they're going to get stuck in a cycle of debt. But really, not all debt is bad, first of all. It's a necessary part of building wealth in this country. Taking on a loan can help you buy a car or a house or start a business, for instance. And if you do want to get a loan to do those things, you need to show a credit score and a credit history. And having a credit card that's in good standing will help you build those. So I talked to John Kiernan. He's the managing editor of the personal finance website WalletHub.
JOHN KIERNAN: Owning a credit card that's in good standing will send positive information to the credit bureaus each month, which will make your credit report look better and then, in turn, lead to a better credit score, which helps you save a lot of money and opens a lot of doors for lending.
FADEL: OK. So that's helpful. What's your last myth?
SEGARRA: When people have a lot of debt that they want to get off their back, their instinct might be to use all the money they have to pay it off as soon as possible.
FADEL: Yeah.
SEGARRA: But Rita Soledad Fernandez Paulino - she's a financial educator. She told us that's a mistake.
RITA SOLEDAD FERNANDEZ PAULINO: If you take all your cash, pay off the credit card, it's only a matter of time before you're going to get into debt again.
SEGARRA: 'Cause think about it, if you don't have savings, the next time your car breaks down or computer dies or you have an emergency, you're going to end up putting that expense on a credit card, right? So the advice is to build up an emergency fund, even as you're making debt payments.
FADEL: Any other tips on how folks should pay off their credit card debt?
SEGARRA: Yes. If you can, always make your minimum payments. This is a big one because if you don't, that hurts your credit score. You'll also be charged late fees. And then you might have your debt sent to collections. If you have multiple credit cards with different interest rates, you want to pay off the one with the highest interest rate first 'cause that'll save you the most money in the long run. And then also know that a lot of your credit card terms are negotiable. So you can actually call your card issuer and ask them for a lower interest rate. And it helps if you look around at other cards that have better rates and ask them to match those, but you can ask them for other things, too, like to waive fees and interests if you accidentally miss a payment.
FADEL: Wow.
SEGARRA: Yeah.
FADEL: I didn't know that.
SEGARRA: And they'll often do it if it's your first time.
FADEL: OK. Well, that's super helpful. NPR's Life Kit host, Marielle Segarra, thank you so much.
SEGARRA: Thanks.
FADEL: You can sign up for Life Kit's credit card debt newsletter series for tips to help you pay down your balance at npr.org/creditcarddebt.
(SOUNDBITE OF SCUBAZ'S "THE VANISHING AMERICAN FAMILY") Transcript provided by NPR, Copyright NPR.
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