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The IRS is testing a system that would allow taxpayers to file federal tax returns for free online directly with the agency, with a pilot program launching for the 2024 filing season.
Nearly three-quarters of taxpayers expressed interest in a free IRS-provided direct filing system, according to a survey from the agency.

Jayme Thornton | Tooga Productions | Getty Images

The IRS is testing a system that would allow taxpayers to file federal tax returns for free online directly with the agency, with a pilot program launching for some filers next year.
Known as Direct File, the pilot program will begin during the 2024 filing season, following recent testing and a feasibility report, as authorized by the Inflation Reduction Act in 2022.

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Direct File would cost an estimated $64 million to $249 million per year, depending on the number of filers and complexity of returns, according to the report.
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“The report shows that a majority of taxpayers are interested in using an IRS-provided tool to prepare and file their taxes,” IRS Commissioner Daniel Werfel told reporters on a call Tuesday.
Nearly three-quarters of taxpayers expressed interest in a free IRS-provided filing system, with high popularity among younger filers, those with limited English proficiency and do-it-yourself taxpayers, according to a 2022 survey cited in the report.

Pushback from the tax prep industry

While some Democrats and consumer advocates have pushed for a direct filing system for years, there has already been pushback from Republicans and the tax preparation industry.

“The IRS direct e-file pilot set to start in January 2024 continues to be a solution in search of a problem,” a spokesperson for H&R Block said in a statement. “With more than 30 organizations already offering free tax preparation, this pilot is unnecessary and faces significant barriers to providing comprehensive tax preparation services.”
Free File Alliance Executive Director Tim Hugo has also criticized the IRS plan. “Free File has been provided at zero cost to the federal government for over twenty years; thus, it is baffling that Treasury and the IRS want to pay tens — and even hundreds — of millions of dollars annually to create an inferior filing option for the American taxpayer,” he said.

It is a watershed moment for the tax system.

Mark Everson
vice chairman at Alliantgroup

And while similar systems have been implemented in other countries, there are lingering concerns about cybersecurity and taxpayer compliance.
“It is a watershed moment for the tax system,” said Mark Everson, a former IRS commissioner and current vice chairman at Alliantgroup. “And I think that the government has to proceed with great caution.”

Taxpayers will ‘always have choices’

Currently, taxpayers with $73,000 adjusted gross income or less for 2022 can use Free File, a public-private partnership between the IRS and Free File Alliance, to file federal returns for free. But the program hasn’t been widely used. Roughly 70% of taxpayers qualify for Free File, but only 2% used it during the 2022 filing season, according to the National Taxpayer Advocate.
Despite the low participation rate, Werfel said the IRS remains “strongly committed” to a variety of filing options for low-income filers, including Free File, which has extended its IRS partnership through 2025. 
“Taxpayers will always have choices for how they file their taxes,” Werfel said on the Tuesday call. “They can use tax software. They can use a trusted tax professional. They can use a paper tax return. We’d rather they file electronically, sure, but they have that choice.” More

The federal debt ceiling stalemate underscores the need for urgent spending reform.
U.S. households are in the same boat after running up record credit card balances.

How to know if you face your own debt default

After contending with high inflation for over a year, households are nearing a “breaking point,” according to a study by WalletHub.
Using the Great Recession as a guide, the projected breaking point is the level of household credit card debt that will become unsustainable for most people, said Jill Gonzalez, an analyst at WalletHub. Currently, the average household’s credit card balance is $9,990, just $2,015 shy of where that tab hits its limit, the report found.

“It’s when people won’t be able to keep up with their bills,” she said. “We’re inching closer and closer to that breaking point.”

High inflation is certainly contributing to Americans’ high credit card balances, along with record-high interest rates, according to Ted Rossman, senior industry analyst at Bankrate. “We’re seeing more people carrying credit card debt, too, often to finance day-to-day essentials.”
More than one-third also now have more credit card debt than emergency savings, which is the highest on record.

‘It’s never too late to turn things around’

As government negotiations over potential federal spending cuts continue, households must also consider where they can cut costs and boost savings.
“It’s never too late to turn things around,” Rossman said.
Most experts recommend starting with a budget — some online tools or the basic envelope method, known as “cash stuffing,” can help — and aiming to set more money aside in an emergency fund, which can shield you from accumulating more debt while you’re working to pay off your existing balance.

Competitive rates at an online bank will protect your cash cushion, Jenkin added.
After years of rock-bottom returns, some top-yielding online savings accounts and one-year certificates of deposit rates are now as high as 5%, much higher than the average rate from a traditional, brick-and-mortar bank, according to Bankrate.
“I call it ‘click and mortar,'” Jenkin said. “The easiest thing to do is simply call the bank and demand a higher interest rate or look at moving money out of your checking account into a savings account.”
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Keeping up with rising inflation has been difficult for Social Security beneficiaries, research finds.
Despite annual cost-of-living adjustments, the cost of goods and services has climbed more.
Prices of eggs and other goods have taken a larger share of older Americans’ budgets.

Lordhenrivoton | E+ | Getty Images

Higher prices have made it difficult for Social Security beneficiaries to keep up, even with a record boost to benefits for 2023.
An 8.7% cost-of-living adjustment, or COLA, put about $140 per month more in Social Security beneficiaries’ checks starting in January, according to estimates from the Social Security Administration.

Yet rising costs means beneficiaries have lost 36% of their buying power since 2000, according to new research from The Senior Citizens League, a nonpartisan senior group.
To be able to live as well on Social Security benefits as in 2000, today’s retirees would need an extra $516.70 per month, the nonpartisan senior group found.

High inflation ‘extremely difficult’ for retirees

Social Security COLAs have increased by 78% since 2000, according to The Senior Citizens League. At the same time, the cost of goods and services retirees typically buy has gone up by 141.4% over that time.
COLAs have averaged 3.4% annually since 2000, while goods and services have averaged about 6.2%.
This year’s loss in buying power — measured from January 2000 through February 2023 — improved from a 40% decline based on last year’s study. Yet the current 36% loss in buying power is still one of the deepest losses recorded, according to the group.

Eggs topped the list of fastest-growing costs for seniors since 2000. Other categories in the top five include prescription drugs, heating oil, dental services and Medicare Part B premiums.

Eggs were also the fastest-growing cost for seniors over the past year, based on data through February, the research found. Recently, wholesale egg prices have dropped from record highs over the winter.
Other categories in the top five for the year included apples, white bread, coffee and dental visits.
“The average retiree has found living with these high rates of inflation extremely difficult,” David Tinsley, senior economist at Bank of America Institute, recently told CNBC.com.
One caveat to a record high COLA this year is that the extra money could be prompting higher levels of spending among older Americans, according to research from Bank of America Institute.
While higher spending may complicate the fight against higher inflation, it is delayed relief for older Americans, whose COLA was lower than price growth in 2022.

The COLA for 2024 may be lower

The Social Security COLA may be around 3.1%, according to a new estimate from The Senior Citizens League, well below the 8.7% increase to benefits beneficiaries saw in 2023, the highest increase in four decades.
The 3.1% estimate for the COLA is preliminary and subject to change, said Mary Johnson, Social Security and Medicare policy analyst at The Senior Citizens League.
The latest consumer price index data shows inflation rose 4.9% over the past year as of April and 0.4% for the month — fueling hopes that inflation will continue to decline this year.
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The subset of the data used to calculate the annual Social Security COLA — called the Consumer Price Index for Urban Wage Earners and Clerical Workers, or CPI-W — rose 4.6% over the past 12 months and 0.6% for the month.
The Social Security Administration determines the annual COLA by comparing third-quarter CPI-W data for the current year to the third quarter of the previous year. A cost-of-living adjustment is put in place if there has been an increase over the previous year. If there is no increase, the COLA may be zero. More

The IRS on Monday confirmed that Black taxpayers are significantly more likely to face an IRS audit.
IRS Commissioner Daniel Werfel said the agency has dedicated “significant resources” to address the disparity.
“I will stay laser-focused on this to ensure that we identify and implement changes prior to next tax-filing season,” Werfel said.

IRS Commissioner Danny Werfel speaks at a Senate Finance Committee hearing in Washington, D.C., on April 19, 2023.
Al Drago | Bloomberg | Getty Images

The IRS on Monday said that Black taxpayers are significantly more likely to face an IRS audit, confirming recent findings. IRS Commissioner Daniel Werfel said the agency is weighing changes to address the disparity.
A study released in January by economists at Stanford University, the University of Michigan, the U.S. Department of the Treasury and the University of Chicago found the IRS audits Black taxpayers about three to five times more than other Americans. Researchers based their assessment on microdata from roughly 148 million tax returns and 780,000 audits.

Those findings prompted questions from lawmakers during Werfel’s nomination process.
“While there is a need for further research, our initial findings support the conclusion that Black taxpayers may be audited at higher rates than would be expected given their share of the population,” Werfel wrote in a May 15 letter to the Senate Finance Committee.
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Werfel said the IRS has dedicated “significant resources” to address the disparity, including a closer look at the agency’s automated processes and data used for exam selection.
Specifically, he vowed to examine algorithms for audits of filers claiming the earned income tax credit, or EITC, a tax break to low- to moderate-income workers. The EITC is more closely scrutinized because it’s refundable, meaning it still provides a refund even when the credit value exceeds taxes owed. Werfel stressed the IRS does not and will not consider race as part of the audit selection process, but the original research suggests the EITC has contributed to the disparity.

Werfel added: “I will stay laser-focused on this to ensure that we identify and implement changes prior to next tax filing season.”

Senate Finance Committee Chair Ron Wyden, D-Ore., said the findings are a “shameful consequence” of racial discrimination that often shows up in government and private organization algorithms. “This bias is completely unacceptable regardless of where it occurs, and we have an obligation to stamp it out,” he said in a statement on Monday.
Wyden said the previous decade of IRS budget cuts made it “virtually impossible to enforce our tax laws fairly,” resulting in an “overreliance on these flawed algorithms.”
Last August, Congress authorized nearly $80 billion in funding to the IRS, aiming to close the tax gap by initially focusing on the tax returns of wealthy families, large corporations and complex partnerships. More

Add To Calendar

Figuring out how to budget for daily expenses, getting started investing so your money grows over time and making sure you’ll have the money to retire is tough.
Here’s a look at three common financial concerns many people tend to have.

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Your net worth is essentially the sum of all of your assets — cash, retirement accounts, college savings, house, cars, investment properties and valuables such as art and jewelry — minus any liabilities, or long-term debt, like a mortgage, student loans, credit card balances, car loans and any other personal loans.
If your net worth is negative, which is not uncommon, you’ll need to work on saving more and spending less.
2. Try following the “60% Solution.” To figure out how much money to spend and save, create a monthly budget for your necessary and discretionary expenses, as well as long-term and short-term savings.
The 60% Solution is one budgeting strategy that I’ve found works well.

The first 60% of your gross income (all of the money you have coming in for the month) goes to “committed expenses,” which includes all taxes, housing costs (rent or mortgage, plus utilities), credit card and everything else that you must pay each month.
The next 30% goes to savings — 20% to long-term savings, including 401(k) plans, individual retirement accounts and other similar products, and 529 college savings plans, and the 10% to short-term savings like your emergency fund.
The remaining 10% is “fun money” for you to spend on whatever you want.

3. Use a spreadsheet, software or mobile app to track your earnings and expenses: Now that you have an idea of where your money should be going, you need to know where it is going right now. Keep track of your earnings and expenses on a spreadsheet or app.
You can use a spreadsheet like Google Sheets, try budgeting software or download an app like Mint or Goodbudget. There are lots of free budgeting tools available online and for your smartphone. Find a tool that shows your income, expenses and savings goals — and helps you manage your money to improve your overall net worth.
‘I have decent savings, and I know I could be making money off it. But I’m scared of the stock market. Any advice for a beginner?’
Before you start investing, outline your priorities and your financial goals. Focus on funding emergency savings, paying off any high interest debt and contributing to retirement savings accounts.
Make sure you have at least three to six months’ worth of living expenses in an emergency fund. Top rates for high-yield savings accounts are nearly 5% right now.
Ken Tumin, founder and editor of DepositAccounts.com, recommends opening an online savings account that links to a checking account at the same bank, and then you can move cash back and forth. “That makes it real easy,” he said. “That money you don’t need right away, you can put into the savings account and get some decent yield — more than we’ve been able to get for more than 10 years.”

Philippe Turpin | Photononstop | Getty Images

If you have high interest debt, like credit card debt, work on paying it off. That represents a significant return: The average rate on a credit card is more than 20%. Meanwhile, even though the overall stock market has been in recovery mode, the S&P 500, which tracks the stocks of 500 of the largest U.S. companies, is only up a little over 7% year to date.
You do want to invest your savings in stocks for the most growth over a long period of time, say the next decade or more. Start by contributing as much as you can to your retirement savings accounts at work, like a 401(k) or 403(b) plan, or on your own in a Roth IRA if your job doesn’t offer a plan. If you’re self-employed, you can contribute even more money to a Solo 401(k).
Consider investing in an S&P 500 Index fund as your initial stock investment. Investing your money in the stock market depends on your financial goals, your risk tolerance and when you’ll need the money.
Start with that S&P 500 fund as your core holding in your retirement account, suggests Winnie Sun, co-founder and managing director of Irvine, California-based Sun Group Wealth Partners and a member of the CNBC Financial Advisor Council. “You can add other stock mutual funds and exchange-traded funds as your portfolio grows,” she said. 

If you don’t want to take on much risk, stable value funds that invest in a mix of bonds may also be worth considering as interest rates are pretty high right now, she added.
Once you have an ample emergency fund and no or little high interest debt, and have contributed the maximum amount to your workplace retirement plan — or at least enough to get your employer’s matching contribution, if offered — then you can open a brokerage account to invest on your own.
Make sure you list your financial goals so you know why you are investing and when you’ll need the money: for college, a home purchase or leaving money for your loved ones. Working with a financial advisor can also help you stay on track.
‘I’m in my mid-50’s and I don’t feel like I have enough money saved up for retirement. How do I calculate how much money I will need, and how long of a retirement should I plan for?’
With inflation, many Americans worry they may not have enough money for retirement, but your life expectancy may be an even greater factor. You could live well into your 80s or longer, depending on retirement income for 15 to 20 years or more.
These two planning tips may help:
Do a “retirement checkup”: Think about at what age you want to retire or stop working full time and consider the Social Security or other benefits you would get at that time. If you’re in your mid-50s, you’ll receive your full retirement benefits from Social Security at age 67. If you retire early at 62, your benefits will be reduced by 30%. But if you delay retirement to age 70, you’ll get 124% of your full retirement benefits.

Colin Hawkins | Image Source | Getty Images

Also, consider how you’ll want to live in retirement. Will you have the same lifestyle? Downsize to a smaller home? Will you move to an area where the cost of living is lower than where you are now? Where you live and how you live can have a significant impact on your expenses.
Create a “retirement budget”: Make a trial budget for your retirement. Factor in your day-to-day expenses, like housing costs, food, health care and long-term care in the city where you plan to live.

It’s a good idea to start talking about your loved ones on what your plan is if you need care and factor this into your retirement savings.

Winnie Sun
managing director of Sun Group Wealth Partners

“Roughly 70% of people age 65 and older will need some type of long-term care during their lifetime,” Sun said. “It’s a good idea to start talking about your loved ones on what your plan is if you need care and factor this into your retirement savings.”
Moving to a lower-cost area may help lower overall expenses. If you downsize, some of the costly expenses you have now, like your mortgage, may no longer exist or will be significantly reduced, decreasing your overall expenses in retirement.
Next, add up all the income you might receive in your post-working years. Factor in pension income if you have one, Social Security payments and any other dollars, such as rental income from a property, that may come your way. Match up revenue and expenses and you’ll get a good idea of what you’ll need to set aside for every year of your retirement.
If you don’t think you’ll have enough money for retirement based on your current savings, plan on working part time in the early part of your retirement — and boost your retirement plan contributions now.
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FA Playbook

Consumers are finally changing their spending habits amid fears of an upcoming recession.
Now, 71% of Americans are likely to keep cash on hand, according to a new report. 
Depending on how accessible you need this money to be, here are some of the best ways to earn interest on your savings.

Renewed fears of a possible recession have spurred more households to adjust their spending habits — finally.
Broadly, Americans are cutting back, particularly on discretionary purchases, and saving more, according to recent reports on the state of the consumer by the Bank of America Institute and Deloitte.

Now, 71% of Americans are likely to keep cash on hand, according to a new Country Financial security index.
To save more, about half of all adults are dining out less frequently and 42% have changed the way they shop for food, according to the Country Financial report, which was provided exclusively to CNBC before its general release Wednesday. Other consumers are driving less to save on gas or canceling some streaming services.
More from Personal Finance:Credit card debt nears $1 trillion3 financial risk areas for consumers to watchHere’s how much emergency savings you need
“With elevated inflation, Americans are doing what they can to make ends meet,” said Chelsie Moore, a certified financial planner and director of wealth management solutions at Bloomington, Illinois-based Country Financial.
“A market of high interest rates is favoring savers versus spenders,” she said. “This means those who are saving are getting paid more to do it.”

Even as Americans are more likely to keep cash on hand, most said they don’t know the best ways to save to reach their short- or long-term savings goals, according to Country Financial.

The best places to park your savings More

Washington lawmakers are still at a stalemate over debt ceiling negotiations.
Any deal that emerges will likely just get the country past the emergency deadline, experts say.
As more spending reform is needed, here’s why policy makers may turn to Social Security and Medicare.

A billboard showing the debt limit is seen in Washington, D.C. on April 17, 2023.
Mandel Ngan | AFP | Getty Images

As lawmakers work to hammer out a debt limit deal, experts already say more needs to be done to curb the nation’s spending, and that could include Social Security and Medicare reform.
The debt ceiling is the maximum amount of money that the federal government may borrow to pay its bills. If the government crosses that threshold, it may default on its debt.

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The point at which the government may not be able to pay all of its obligations — known as the “X date” — could happen in the first two weeks of June, according to the Congressional Budget Office. Treasury Secretary Janet Yellen has warned the U.S. could run out of money as soon as June 1.
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Thus far, lawmakers have been unable to quickly resolve the issue. House Republicans have passed legislation called the Limit, Save, Grow Act to raise the debt ceiling. But Democrats including President Joe Biden have rejected the terms.
While there is optimism both parties will come together to address the issue, experts say it is unlikely any compromise will include long-term fixes for the nation’s fiscal woes.
Debt held by the public as a share of GDP averaged about 46% to 47% from 1973 to 2022, Jason Fichtner, chief economist at the Bipartisan Policy Center, noted during a webcast hosted by the think tank on Monday.

That debt is now near 100%, he said, while the CBO is projecting it could climb to 118% of GDP by 2033, the highest level recorded.

Debt likely to require more negotiations

The fiscal imbalance is leading to significant debts and deficits, noted Warren Payne, senior advisor at law firm Mayer Brown. And while the debt limit will be an “action-forcing event,” the results likely will not go far enough, he said.
“We’re not going to have any big substantial change in the debt and deficit trajectory based on what is coming out of the negotiations right now,” Payne said.
“It’s going to be really important that this conversation continues into another round of negotiations,” he added.

One way to save may be to address spending on programs like Medicare and Social Security, the experts said. Both programs could be in the crosshairs if the government hits the debt ceiling and is forced to choose among its obligations.
Long-term, both programs have complex reform needs. Medicare’s Hospital Insurance trust fund will be depleted in 2031, according to the latest projections from the program’s trustees.
Meanwhile, Social Security’s trust fund used to pay retirement benefits will be able to send full checks for just 10 years, the Social Security trustees project. At that point, 77% of those benefits will be payable. When combined with Social Security’s disability trust fund, the projected depletion date is 2034.
Rather than wait for a big overhaul, more incremental changes can be made these programs now, experts suggested during Monday’s Bipartisan Policy Center panel.

Curb excess Medicare spending

While debt ceiling negotiations have focused on work requirements for government programs, there may be other ways to help reduce spending, noted Jim Capretta, senior fellow at the American Enterprise Institute.
In Medicare and Medicaid, “there’s a lot of waste, fraud and abuse, and it has been that way for a long time,” Capretta said.

The government may be able to do better with more resources by implementing additional background checks and requirements to make sure providers are legitimate before they get paid, he said.
In addition, Medicare is paying different prices for the same services based on where they are provided provided, and may save a “pretty good amount of money” by revisiting that policy, Capretta said.
Admittedly, these changes may not solve all of Medicare’s fiscal woes, he said, but may provide a more immediate way to start to cut costs.

Automatic adjustments to Social Security

Social Security benefits are largely based on payroll taxes that fund retirement or disability benefits.
The program has some adjustments in place for inflation or wage growth.
However, it does not correct for a mismatch when demographics change, Capretta noted.
By building automatic adjustments into Social Security — such as for length of retirement, mortality estimates, fertility estimates and wage growth — the program could self-correct on a gradual basis, which would enable it to stay solvent, Capretta said.

We’re not going to have any big substantial change in the debt and deficit trajectory based on what is coming out of the negotiations right now.

Warren Payne
senior advisor at Mayer Brown

This would avoid requiring Congress to enact changes to keep the program in balance, he said.
Notably, one change enacted in 1983 — raising Social Security’s retirement age to 67 — is still getting phased in for today’s retirees.
Those reforms went right up to the deadline before Congress was able to act because Social Security is so “politically fraught,” noted Payne.
Future negotiations may have the same urgency, he said, as lawmakers generally avoid topics like raising the retirement age or hiking payroll taxes.
“What we’ve seen recently is Congress is largely incapable of even having that conversation,” Payne said. More

Total credit card debt stood at $986 billion in the first quarter of 2023, according to the Federal Reserve Bank of New York.
Usually, balances fall in the beginning of the year as borrowers start paying down debt after the peak holiday shopping season — not this time.
Credit card balances are up almost 20% from a year ago, according to a quarterly credit industry insights report from TransUnion.

Collectively, Americans owe nearly $1 trillion on credit cards.
Total credit card debt stood at $986 billion at the start of 2023, unchanged from the record hit at the end of 2022, according to a new report on household debt from the Federal Reserve Bank of New York.

Typically, balances fall in the beginning of the year as borrowers start paying down debt after the peak holiday shopping season. “This is the first time in 20 years we are not seeing a decrease,” according to New York Fed researchers, citing inflation and a higher cost of living.
More from Personal Finance:3 financial risk areas for consumers to watchAmericans are saving far less than normalA recession may be coming — here’s how long it could last
Credit card balances are up almost 20% from a year ago, according to a separate quarterly credit industry insights report from TransUnion.
The average balance rose to $5,733 over that same period, TransUnion found.
“As inflation rose to near 40-year-high levels, many consumers have used credit to help manage their budgets, leading to record- or near-record high balances,” said Michele Raneri, TransUnion’s vice president of U.S. research and consulting.

“Unfortunately, credit card debt is likely only to keep rising in the near future,” said Matt Schulz, chief credit analyst at LendingTree.

On the heels of another rate hike earlier this month by the Federal Reserve, the average credit card rate is now more than 20% on average, an all-time high.
Sky-high APRs make credit cards one of the most expensive ways to borrow money from month to month and yet, many Americans continue to take on ever-increasing amounts of debt. While balances are higher, nearly half of credit card holders carry credit card debt from month to month, according to a separate Bankrate report.
However, there are some strategies to help pay down high-interest credit cards once and for all. Here’s what experts recommend:

Five ways to tackle high-interest credit card debt

1. Reassess your spending. Most experts recommend starting with a basic budget. “The truth is that you cannot make a meaningful plan to tackle debt if you don’t know exactly how much money is coming in and going out of your household each month,” Schulz said.
“You may not like what you see, but it is better to deal with the reality of the situation than to bury your head in the sand.”

Getty Images

Using a worksheet or online tool can help you assess where you are spending money and how to better disperse those funds.
2. Plan a payoff strategy. There are two ways you could approach repayment: prioritize the highest-interest debt or pay off your debt from smallest to largest amount, according to Russell Nelson, manager of the credit card products acquisition team at Navy Federal Credit Union.
The avalanche method lists your debts from highest to lowest by interest rate. That way, you pay off the debts that rack up the most in interest first. The snowball method prioritizes your smallest debts first, regardless of interest rate, to help gain momentum as the debts are paid off.
With either strategy, you’ll make the minimum payments each month on all your debts and put any extra cash toward accelerating repayment on one debt of your choice. “You may also consider setting up automatic payments along with text alerts on your mobile device to ensure payments are made on time,” Nelson advised.
3. Snag a 0% balance transfer credit card. Cards offering up to 21 months with no interest on transferred balances are one of the best weapons Americans have in the battle against credit card debt, Schulz said.

Jroballo | Istock | Getty Images

To make the most of a balance transfer, aggressively pay down the balance during the introductory period. Otherwise, the remaining balance will have a new annual percentage rate applied to it, which is about 23%, on average, in line with the rates for new credit, according to Schulz.
4. Ask for a lower credit card rate. If you’re carrying a balance, try calling your card issuer to ask for a lower annual percentage rate. “You really have nothing to lose,” Schulz said.
In fact, 76% of people who asked for a lower interest rate on their credit card in the past year got one, according to a LendingTree report. You may also be able to get a reduced annual fee, higher credit limit or waived late fee, Schulz added.
5. Take advantage of high-yield savings accounts. In addition to paying down your debt, put aside some money to build up your emergency reserves, which will keep you from accumulating more debt while you’re working to pay off your existing balance.

“Robust savings are key to getting out of debt,” Schulz said.
Take advantage of competitive rates at an online bank, added Greg McBride, chief financial analyst at Bankrate.com. After years of rock-bottom returns, some top-yielding online savings accounts and one-year certificates of deposit rates are now as high as 5%.
“This could be ‘last call’ for savers,” McBride said, adding, “CD yields on maturities of one year and longer have peaked and now is the time to lock in.”
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