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What You Can Do to Finally Get Out of Credit Card Debt
Personal Finance
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Thanks to the significant challenges presented by the ongoing COVID-19 pandemic, more Americans than ever are struggling financially. With a lot of people out of work due to the staggering number of business closers, many are turning to credit cards to help make ends meet. According to one recent study, total credit card balances in the United States ballooned to a massive $893 billion as of the first quarter in 2020. People with average or good credit scores ranging from 670 to 739 tend to carry the most debt, with an average of about $9,712 per card. Thankfully, all hope is not lost. Even if you're currently carrying large balances, there are a number of steps you can take to find the relief that you seek – you just need to keep a few key things in mind along the way. Getting Out of Credit Card Debt: One Step at a Time By far, one of the best moves you can make to get out of credit card debt involves using a balance transfer card as strategically as possible. Yes, at this point you're just moving debt from one card to another - but if that balance transfer card doesn't charge interest for a specific length of time (think: six months to a year), you'll be able to continue making payments and still save a large amount of money every month. Keep in mind, however, that most balance transfer cards charge a fee ranging between 3% and 5% of the total amount that you're transferring. If you're planning on using a balance transfer card to move $2,000, for example, this likely means that you'll have to pay up to $100 for the ability to do so. Be aware of these fees and plan accordingly if this is the move you're going to make. Note, however, that you'll typically need a credit score of at least 670 in order to get approved for one of these cards with a 0% introductory interest rate. If yours isn't quite at that level yet, you'll likely want to explore other options. Along the same lines, you could also look into a debt consolidation loan - which is a bit like a personal loan that you specifically use to pay off your credit card debts. Not only could you easily get a loan for a lower interest rate than you're currently paying with your credit cards, but you can also use the money to consolidate many different cards into a single loan. This means you'll also only have one monthly payment to manage, too. Debt consolidation loans usually have set terms, which can be anywhere from 48 to 60 months. But the major benefit here is that you'll also have a simple, fixed and predictable payment amount that you're responsible for every month - thus making it easier to repay what you owe without stress. Finally, a lot of people don't realize that you can actually try negotiating your credit card debt with a lot of the major financial lenders out there. Look on your latest statement to find the contact information for your credit card issuer and pick up the phone and give them a call. At the very least, you may be able to negotiate a lower interest rate, reduced monthly payments or both depending on your history with that particular company. Depending on the situation, you could also try to negotiate what is called a debt settlement, which is when the credit card issuer accepts a single lump sum payment to settle all debts on the card. Note that this isn't always possible, but it certainly won't hurt to ask. The worst they can say is "no," at which point you're free to explore some of the other options on this list. In the end, it's important to understand that while it is entirely possible to get out of credit card debt, the best thing to do would be to take steps to avoid this situation in the first place. Try to use your credit card the same way you would a debit card - meaning, don't use credit to make purchases that you can't really afford in the first place. If nothing else, try to only make purchases that you know you'll be able to pay off by the time your next statement rolls around. That way, you'll still get all the items you need, and you'll avoid significant interest charges as well.
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Tax and Financial Insights
by NR CPAs & Business Advisors
2026 IRS Mileage Rates: Key Updates and Insights
The IRS has rolled out the inflation-adjusted mileage rates for 2026, offering taxpayers an efficient way to claim deductions for vehicle-related expenses incurred for business, charity, medical, or moving purposes. These adjustments reflect the continued economic shifts impacting car operation costs.
Effective January 1, 2026, the new standard mileage rates are established as follows:
- Business Travel: Increased to 72.5 cents per mile, inclusive of a 35-cent-per-mile depreciation allocation. This marks a rise from the 70 cents per mile rate set for 2025
- Medical/Moving Purposes: Reduced slightly to 20.5 cents per mile, down from 21 cents in the previous year, reflecting the variable cost considerations.
- Charitable Contributions: Consistent at 14 cents per mile, a fixed rate unchanged for over a quarter-century.
As is typical, the business mileage rate considers the integral fixed and variable costs of automobile operation. Meanwhile, the medical and moving rates remain contingent on variable expenses as determined by the IRS study.
It is critical to note that the One Big Beautiful Bill Act (OBBBA) held firm on disallowing moving expense deductions except for specific cases within the Armed Forces and intelligence community, marking a substantial shift since 2017.
When engaging in charitable work, taxpayers might opt for a direct expense deduction over the per-mile method, covering gas and oil costs. However, comprehensive upkeep and insurance costs are non-deductible expenses.
Business Vehicle Use Considerations: Taxpayers can alternatively compute vehicle expenses using actual costs, which might benefit from shifting depreciation rules, particularly through bonuses and first-year advantages. Keep in mind, however, reverting from actual cost calculations to standard rates in subsequent years is restricted, particularly per vehicle protocol and when exceeding four vehicles in concurrent use.
Additionally, parking, tolls, and property taxes attributable to business can be deducted independently of the general rate, an often-overlooked advantage by many business owners.
Tax Strategies for Employers and Employees: Reimbursements based on the standard mileage framework, providing the right documentation is in place, remain tax-free for employees. Meanwhile, the elimination and continued prohibition of unreimbursed employee deductions continue, with particular exceptions offered to qualified personnel across specific occupations.
Opportunities for Self-employed Individuals: Entrepreneurs remain eligible for deductions on business-related vehicle use via Schedule C, with potential to account for business-use interest on auto loans.
Heavy SUVs and Deduction Advantages: Heavier vehicles exceeding 6,000 pounds but under 14,000 pounds open opportunities for substantial tax deductions through Section 179 and bonus depreciation avenues. The lifecycle of such a vehicle bears implications on recapturing initially claimed deductions, urging cautious tax planning.
For professional guidance on optimizing your vehicle-related tax deductions and understanding their implications on tax strategies, contact our office in Coral Gables, Florida, where expert advice and strategic insights are just a call away.
Educator's Deduction Reform: Key Changes Under OBBBA
The One Big Beautiful Bill Act (OBBBA) introduces significant enhancements for educators' tax deductions starting in 2026, offering both strategic opportunities and planning considerations for educators who qualify. With the reinstated itemized deduction for qualified unreimbursed expenses, educators have a broader spectrum of financial relief. This is complemented by the retention of the $350 above-the-line deduction, allowing educators to maximize their tax benefits by selectively allocating expenses between these avenues.
Understanding the nuances of these changes is crucial for educators and financial advisors alike. The dual-option deduction strategy can potentially enhance tax efficiency, thereby aligning with broader financial planning goals.
At NR CPAs & Business Advisors, based in Coral Gables, Florida, our expertise in tax preparation and planning provides invaluable support to educators navigating these changes. Our comprehensive approach, combined with personalized advice from our experienced team, ensures compliance and optimization in line with the latest tax legislations.
Given these updates, it is imperative to engage with seasoned professionals to fully leverage your deduction strategies. Contact us today to streamline your tax planning under OBBBA's new guidelines and maximize your deductions for upcoming tax years.
