Credit card debt is increasingly becoming an obstacle for Americans trying to save for retirement.

Digging out of that hole isn’t easy. A $3,000 balance at 19.8% interest will take nearly 19 years to pay off if the borrower makes only the minimum payment. In that time, the borrower will pay $4,343 in interest charges.

The convenience of “buy now, pay later” may seem appealing, but the interest charged for that convenience can create unhealthy financial habits that can postpone saving for retirement, or reduce the amount you could potentially save. It’s difficult to reduce credit card debt because the interest adds up quickly. Making minimum payments barely makes a dent in what you owe. The only way to break the debt cycle is to stop charging for your purchases and to pay off as much of your credit card as you can each month. If you’re facing debt, it is important to understand what you owe and what you can do to reduce that debt so you can maximize your retirement savings.

Make Saving a Priority — Control and Reduce Your Debt

To take control of your debt, you need to take an honest look at what you owe and develop a plan to pay it off. Here’s how: 

• Add up your total credit card debt.  Knowing how much you owe is important: If you don’t understand the scope of the problem, you won’t be able to solve it. If you need additional motivation to get your debt under control, add up all of the interest you paid this month and multiply it by 12. The amount is roughly equal to the total interest you’ll pay over the next year if you only make minimum credit card payments. In the example above, a full year of interest payments adds up to more than $1,400!
• Once you know how much you owe and how much interest you’re being charged, develop a strategy to pay down your debt.
• Assuming you have more than one credit card, start with the card with the highest rate of interest and make the largest payment you can while still making the minimum payments on any other cards.
• Establish a monthly budget for credit card payments and pay the full amount of the budget every month until the debt is paid off. For example, if your monthly credit card budget is $500, you should pay $500 a month until the debt is paid off. In other words, don’t pay less each month as your debt is reduced. The great thing about establishing a budget is that you can pay off your debt faster and faster (assuming you’re not adding to the debt).

Let's assume you owe $10,000 in credit card debt at an average interest rate of 17% and you have a budget of $500 a month to pay off the debt. The chart below shows how quickly you can pay down that debt with a disciplined pay off schedule.

• Once the highest interest card is paid off, take whatever you were paying on that card and add it to the minimum monthly payment of your next highest card. Follow this process until your debt is gone. And, in the meantime, stop using your cards. Cut them up, freeze them in a block of ice...do whatever you need to do to break the cycle of buy now, pay later.

By following these steps, you can take control of your debt and, ultimately, reduce it. When you spend less on debt, you will have more to invest in your future. As Benjamin Franklin once said, “An ounce of prevention is worth a pound of cure.”

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