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Credit card debt hit $1.13 trillion, with consumers adding $50 billion to balances in the fourth quarter of 2023. Here’s how to keep from adding to this figure. [[{“value”:”
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Household credit card debt has increased dramatically, with consumers adding an estimated $50 billion in combined credit card debt just in the fourth quarter of 2023. This means the collective credit card balance among U.S. households hit $1.13 trillion.
That’s a huge amount of money owed on credit cards, especially given the national average interest rate on those cards is 21.47%. But the good news is, you don’t have to be among the millions paying a fortune in interest to creditors. Just follow these tips to thrive even as credit card companies rake in the cash.
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1. Pay off your credit card balance in full every month
The best way to thrive in this high-debt environment is to simply avoid going into credit card debt. You do not have to pay interest if you pay off all the charges on your card when your statement balance comes.
Keep track of what you are spending on your cards to ensure you have the money in the bank to pay them off. You can sign into your account regularly to check your balance, and can live on a budget to ensure your charges don’t get out of control.
You can even set up automatic payments for the full balance right out of your checking account so you’re never tempted to let your balance grow.
2. Consider refinancing if you already have debt
If you already have credit card debt, paying it off in full ASAP should be your top financial goal since interest rates are so expensive. It can be easier to do that if you refinance the debt to reduce your rate.
A personal loan is one great option for refinancing if you qualify for one. You can get a personal loan at a lower rate than your cards in many cases (the national average personal loan rate is just 12.35%). Personal loans also have predictable payoff schedules lasting a few years, so you won’t be stuck in debt indefinitely as you could be if you only make credit card minimum payments.
You can also get a balance transfer credit card to make paying off your balance cheaper. Balance transfer cards offer promotional 0% rates for a period of time, such as 15 months. Just be sure you can pay off the full balance you’re transferring before the promotional rate resets. And be aware that many balance transfer cards charge an upfront fee of 3% to 5% of the transferred balance.
3. Use credit cards as a tool
Finally, you can and should use credit cards as a tool as long as you can do so responsibly. Don’t be afraid to sign up for a good rewards card, charge essential purchases on it, and get points and miles for doing so.
As long as you’re living on a budget and paying off the card in full every month, there’s no reason not to take advantage of the chance to have the card companies actually pay you.
By following these three hacks you can thrive rather than struggle along with the millions of your peers who owe a ton of money on their credit cards. And if you know others who are having a hard time with their debt, help them make a payoff plan of their own so this trillion-dollar balance will shrink.
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