(InvestigateTV) — Americans now owe a record $1.14 trillion in credit card debt, according to the New York Fed.
That is an increase of 48% from 2021 and up 11% from August 2023.
Ted Rossman with Bankrate said high inflation is a big reason everything costs more, which causes some people to rely more on their credit cards. At the same time, high interest rates, which are fighting inflation, are also making it harder to pay off that credit card debt.
He said the average interest rate is around 20.73%, which is also close to a record high.
“If you have the average credit card balance, which is around $6,300 dollars, according to TransUnion, and you make minimum payments of 20.73%, you’re going to be in debt for 18 years and you’re going to owe about $9,500 in interest,” Rossman said. “So, we definitely want to come up with a better payback plan.”
Rossman urged people carrying credit card debt to first let go of the shame, because a lot of people are in the same boat. In fact, half of all card holders carry debt from month to month.
“My favorite idea is to get a zero percent balance transfer credit card. You can avoid interest for up to 21 months on cards like Wells Fargo Reflect and the Citi Simplicity,” he said. “You take your existing high-cost debt and move it over to a new card with a generous zero percent promotion, that can be tremendously impactful.”
He said you can combine that with other strategies. Maybe take on a side hustle, cut your expenses, sell stuff you don’t need. He said it’s important to make credit card debt payoff a priority given how high these interest rates are.
And if you don’t have great credit or you’re not comfortable getting another credit card, Rossman said you can also work with a reputable credit counseling agency like Money Management International or GreenPath.
Copyright 2024 Gray Media Group, Inc. All rights reserved.