I Break This Dave Ramsey Rule Every Day — And I’m Starting to Rethink It

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American credit card debt is up 28% from two years ago. Read on to learn more about how to get out of credit card debt. 

Over the past few years, I’ve gotten into the habit of using my credit card for nearly all my monthly expenses. I have a Prime Visa that earns me 5% cash back on my Amazon purchases and varying levels of cash back on other purchases.

At the end of the year, I usually have a substantial sum of money from the cash back rewards I usually put toward Christmas presents or to help cover vacation costs.

Using a credit card almost daily breaks one of the cardinal rules of Dave Ramsey’s debt-free living strategy. He recommends not having a credit card at all, and while that may seem extreme, I get it. I recently lost track of how much I put on my credit card and was surprised to see the amount.

Credit card balances balloon quickly

While I’ve begun to pay the balance back down on my credit card, it reminded me of how quickly credit card balances can grow if you’re not paying attention.

The latest TransUnion data shows that Americans have an average of $5,733 in credit card debt, up 14% from the same period in 2022. And the Federal Reserve Bank’s latest data shows that total credit card debt for all Americans has reached a near record high of $986 billion, up 28% from two years ago.

The surge in inflation over the past few years may be one of the reasons why Americans are reaching for their credit cards more often. That’s not great news considering that the average interest rate on credit cards is around 20% right now, which means that using credit cards to cover everyday expenses is more expensive than ever.

Looking at my card balance has caused me to consider changing my credit card usage so that my balance doesn’t tick up any higher. And if you’re in the same boat, there are some straightforward steps you can take to help get your card balance under control.

How to pay off credit card debt

If your credit card debt is uncomfortably high, the first thing you should do is stop using your card. Adding to your balance will only make it more difficult to pay off.

You may also want to look at your current expenses with a budgeting app so you know exactly where your money is going. I’ve been looking closely at my monthly expenses lately and cutting back on some expenses that don’t need to be there.

Once you have a good idea of how much you spend on necessities each month, figure out what expenses you can cut out. For example, if you bring in $4,000 per month after taxes, and have $3,800 in expenses, then put $200 toward your credit card balance. Even if you’re not able to put a lot of money toward your card every month, make sure you’re paying something toward the balance.

If you need some extra help, you may want to consider a debt consolidation loan. This type of personal loan can help by creating a set monthly payment each month that may have a lower interest rate than your credit card.

Once you’ve paid off your credit card debt, one of the best ways to keep it from building back — aside from not using a credit card — is to build up your emergency fund in a high-yield savings account. Doing so will allow you to pay for unexpected expenses with cash instead of credit.

If you’re like most Americans, it may be time to take an honest look at your credit card balance right now. I did recently, and it’s helped me get back on track. It may be painful at first, but I promise you’ll be glad you did.

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The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Chris Neiger has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon.com and Visa. The Motley Fool has a disclosure policy.

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