A new survey of Americans carrying at least $10,000 in unsecured debt found that borrowers are abandoning the old playbook of simply paying a little extra each month, instead turning to spending cuts, side income, consolidation and — for nearly a third — retirement withdrawals to attack stubbornly high balances. The survey, conducted by Freedom Debt Relief, shows that even borrowers who make every monthly payment on time can find interest charges eating up their progress.
With inflation pushing up the cost of housing, groceries and utilities, many borrowers can’t free up the hundreds of extra dollars a month that high-rate credit card and loan balances demand, forcing them to restructure or refinance the debt itself.
Cutting Spending Frees Up Cash for Payments
The most common move borrowers are making is trimming discretionary spending inside their existing budgets. According to the Freedom Debt Relief survey, 41% of respondents have stopped dining out or ordering delivery, 40% have eliminated unnecessary online shopping, and 35% have switched to generic groceries and household products.
Redirecting even $100 or $200 a month toward a high-rate balance can reduce interest costs over time, and unlike new borrowing, these cuts don’t require qualifying for financing. But the survey’s findings also show the limits of austerity: spending cuts alone rarely provide enough room for borrowers with substantial balances to make meaningful progress.
Selling Belongings and Taking on Extra Work
Beyond the monthly budget, 31% of surveyed borrowers have sold unused belongings and 15% have taken on a second job or side gig to put more money toward their debts. Selling items provides a one-time cash infusion that can go straight to outstanding balances, while extra work generates recurring income.
Both approaches carry trade-offs. Selling belongings offers only a limited pool of cash, and additional hours can strain borrowers already juggling demanding primary jobs.
Consolidating Debt to Lower the Interest Rate
Rather than only finding more money, some borrowers are making their existing debt cheaper. Debt consolidation combines multiple balances into a single loan, typically at a lower rate than credit cards or personal loans carry. Balance transfer credit cards offer another route, especially for borrowers who qualify for 0% promotional rates that temporarily eliminate interest on transferred balances.
The survey warns borrowers to verify whether the new financing truly helps them repay debt, as longer repayment periods or increased card balances could cancel out any savings.
Debt Consolidation Risks from Retirement and Home Equity
Some borrowers are taking more consequential steps. Nearly one-third of Freedom Debt Relief’s survey respondents reported withdrawing retirement savings to repay debt within the previous year, and 24% borrowed against home equity to consolidate balances.
Both moves unlock substantial funds, but they carry real risks. Retirement withdrawals can trigger taxes and early-withdrawal penalties while shrinking long-term investment growth, and home equity borrowing converts unsecured debt into debt secured by the property, putting the home at risk if payments fail.
Negotiating With Creditors or Pursuing Debt Settlement
Borrowers who are struggling to keep up are also seeking help directly. Creditors often run hardship programs that reduce interest rates or modify payment schedules, and credit counseling agencies can arrange debt management plans that consolidate eligible payments at lower rates. For those in deeper difficulty, debt settlement — alone or through a debt relief company — can settle eligible unsecured debt for less than the full amount owed, though results aren’t guaranteed and delinquency carries consequences.
Questions Borrowers Are Asking Right Now
Does cutting spending actually pay off high-rate debt fast enough?
For many borrowers it helps but isn’t enough on its own. The Freedom Debt Relief survey found 41% stopped dining out and 40% cut online shopping, yet borrowers with large balances often need to combine those cuts with lower-rate financing to make real progress.
Is it worth withdrawing retirement savings to pay off credit cards?
Nearly one-third of surveyed borrowers did exactly that in the past year, but the move can trigger taxes, early-withdrawal penalties and lost investment growth, so the survey’s respondents weighed it against the cost of carrying high-rate debt.
Can a balance transfer card really eliminate interest?
It can temporarily. Borrowers who qualify for 0% promotional balance transfer rates can pause interest charges on transferred balances, but the survey warns that extending the repayment term or adding new card spending can undermine the savings.
The strategies borrowers choose now reflect a simple shift: with interest charges elevated and necessities more expensive, the most effective approach isn’t always the fastest one, but the one that lets a borrower make consistent progress without creating new financial hurdles.
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