The debt repayment tactics Americans are using most to tackle costly balances

For many people, debt repayment once seemed fairly simple: make the required monthly payments, add a little extra when possible and gradually get back in the black. But for borrowers carrying thousands of dollars in high-interest debt, that strategy has become much harder to sustain. Even those who keep up with their payments each month may see interest charges swallow the progress they hoped to make, leaving balances stubbornly high.

Cutting expenses or taking on extra work can help free up cash for larger payments, but those steps do not always create enough breathing room to bring real relief. When much of a household budget is already tied up in essential costs such as housing, groceries and utilities, finding hundreds of extra dollars for credit card or loan balances can be difficult.

That has pushed many borrowers to rethink how they handle repayment, looking beyond standard budgeting tactics for ways to reduce what they owe and regain control of their finances. Some are making small changes, while others are taking more significant financial steps. So which strategies are they using most?

The most common ways Americans are paying down expensive debt

A recent survey by Freedom Debt Relief of Americans carrying at least $10,000 in unsecured debt found that borrowers are using a broad mix of tactics to manage their balances. Below are some of the most popular approaches, along with the trade-offs they can involve:

Reducing discretionary spending to free up repayment cash

Many borrowers are trying to create more room in their current budgets so they can pay down debt faster. In the survey, 41% of respondents said they had stopped dining out or ordering delivery, while 40% said they had cut unnecessary online shopping. Another 35% reported switching to generic grocery and household items to lower everyday costs.

These changes can work because they free up money without requiring new borrowing or additional financing. Even moving $100 or $200 a month toward a high-rate balance can help reduce interest costs over time.

The downside is that budget cuts can only go so far. Borrowers with large balances may need additional steps to make meaningful progress.

Selling items or earning extra income

Some borrowers are also looking beyond their regular budgets for more repayment money. According to the survey, 31% have sold unused belongings, while 15% have taken on a second job or side gig to put more toward their debts.

Selling items they no longer need can produce quick cash that can be applied immediately to debt. Additional work, meanwhile, can bring in recurring income that borrowers can direct toward lowering their balances.

Neither approach is necessarily a long-term fix, though. Selling belongings is a one-time source of money, and extra work can add pressure, especially for people already juggling demanding schedules at their primary jobs.

Consolidating high-interest debt

Instead of simply trying to find more money for extra payments, some borrowers are working to make their debt less expensive by consolidating it.

Debt consolidation lets borrowers combine multiple balances into a single loan, often at a lower interest rate than the one attached to their current credit cards or personal loans. By rolling several debts into one lower-rate obligation, they can simplify repayment and potentially reduce interest costs.

Balance transfer credit cards are another consolidation option. They can be especially helpful for borrowers who qualify for 0% promotional balance transfer rates. These offers can temporarily eliminate interest on transferred balances, making it easier to pay down what is owed.

Before choosing either option, borrowers should make sure the new financing actually improves their repayment outlook. A longer repayment term or continued credit card spending can cancel out the potential savings.

Using home equity or retirement savings

Some borrowers are taking even more serious steps to get rid of costly debt, including tapping home equity or retirement funds. Nearly one-third of Freedom Debt Relief survey respondents said they had withdrawn retirement savings to pay debt within the past year, while 24% said they had borrowed against home equity to consolidate balances.

Both approaches can provide access to sizable amounts of money, but they also come with major risks. Retirement withdrawals can trigger taxes and early withdrawal penalties, and they can also reduce long-term investment growth. Home equity borrowing may offer lower interest rates, but it converts unsecured debt into debt backed by the home, which could put the property at risk if payments are missed.

Working with creditors or seeking debt relief

Borrowers who are struggling to keep up are also reaching out directly to creditors or turning to formal debt relief options. Creditors may offer hardship programs that reduce interest rates or modify payment terms. Credit counseling agencies can also help arrange debt management plans that consolidate eligible payments and may lower interest costs.

For people facing more serious financial strain, debt settlement may be worth considering, whether handled independently or through a debt relief company. This approach can help consumers settle eligible unsecured debt for less than the full amount owed, with professionals negotiating on their behalf. Results are not guaranteed, and falling behind can have financial consequences, but debt settlement may offer meaningful relief for those who cannot repay under the original terms.

The bottom line

Borrowers are approaching expensive debt from several angles, and for good reason. Inflation remains elevated, interest charges are high and many households are stretched thin, making debt repayment more difficult. Budget adjustments and extra income can help, but people with large high-rate balances may need to consider options that change the cost or structure of what they owe.

Before choosing a strategy, it is important to weigh total repayment costs, possible risks and whether the monthly payment or lump-sum settlement is realistic for your budget. The best approach is not always the fastest one; it is the one that allows steady progress without creating additional financial problems.