Debt by situation: credit-card, medical, and student-loan

Credit-card debt

Credit-card debt is usually the most expensive money you carry, because the interest rates are high and compound monthly. That makes it the first thing to attack with the avalanche method, and a strong candidate for a lower rate through a nonprofit debt management plan or a consolidation loan if you qualify. The fastest progress comes from paying well above the minimum, since paying only the minimum can stretch a balance out for years and multiply what you ultimately pay.

Two habits protect your progress. Stop adding new charges to the card you are paying down, because a balance you keep feeding never shrinks. And call your card issuer to ask for a lower rate or a hardship program; issuers sometimes say yes, especially if you have paid on time, and it costs nothing to ask. If the rate is the problem, our options guide compares balance transfers, consolidation, and a debt management plan.

Medical debt

Medical debt behaves differently from other debt, and a few specific moves can shrink it before you ever think about relief programs. First, always ask for an itemized bill and check it; billing errors and duplicate charges are common. Second, ask the provider about financial assistance or charity care, which many hospitals are required or willing to offer based on income, and about a cash or prompt-pay discount. Third, ask for an interest-free payment plan directly with the provider before the bill goes to collections.

Try hard not to move medical debt onto a credit card or a medical credit card with a deferred-interest offer, because that swaps a flexible, often interest-free bill for high-interest debt with fewer protections. Recent changes have also limited how some medical debt appears on credit reports, but the safest path is still to negotiate the bill down and set up a manageable plan directly. If a bill is wrong or you are being pursued for an amount you dispute, a nonprofit counselor or a medical-billing advocate can help.

Student-loan debt

Student loans split into two worlds, and the difference matters. Federal student loans come with protections and flexible repayment that private loans usually lack: income-driven repayment plans that cap payments as a share of income, deferment and forbearance for hardship, and potential forgiveness paths for certain public-service or long-term repayment situations. Before you panic about a federal balance, find out which repayment plan you are on and whether a better one would lower your payment.

Private student loans have fewer built-in options, so the levers are refinancing to a lower rate if your credit supports it, or negotiating directly with the lender during hardship. Be careful refinancing federal loans into a private loan, because doing so permanently gives up the federal protections above. As a rule, exhaust federal repayment and hardship options before any drastic step, and treat any company that charges a fee to enroll you in free federal programs as a red flag. The U.S. Department of Education's official servicer channels never charge for those programs.

When the mix is the problem

Many people carry several of these at once: a couple of cards, an old medical bill, a student loan. When that is the case, the plan from our get-out-of-debt guide still applies. Make every minimum, attack the highest-rate debt (almost always the cards) first, and use each debt type's specific tools (provider negotiation for medical, federal repayment plans for student loans) to lower what you owe along the way. If the total is unmanageable, a nonprofit credit counselor can look at everything together and tell you honestly whether a debt management plan or another option fits.