Is It Normal to Have Credit Card Debt?

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Many consumers have credit card debt. Find out if this is something to worry about and what you can do about it. 

When you have credit card debt, it can start to feel like a regular part of life. You use your card, you make payments, and your balance goes up and down. Over time, you get used to carrying a balance.

People in this situation sometimes wonder if it’s normal to have credit card debt. The answer: Statistically speaking, yes, it’s normal. But in this case, normal isn’t good.

Credit card debt is a common issue

Credit card debt is as normal as it gets in the United States. According to the latest credit card debt statistics, the average debt amount is $6,365. It’s worth noting that the median amount is much lower at $2,700. That means the median is likely more representative of the typical person’s credit card debt.

The fact that credit card debt is so common doesn’t make it any less of an issue. Most credit cards have high interest rates, and they’ve been on the rise. The average credit card interest rate is a staggering 22.16%. If you have $2,700 in debt at that interest rate, it will cost you about $600 per year in interest.

Paying that much interest makes it hard to get ahead financially. That’s why credit card debt often leads to more problems, including:

Not being able to save or invest any moneyNot having enough money to pay all your billsNeeding to borrow more money to cover your living expenses

It can also negatively affect your credit score. One of the key factors in your credit score is your credit utilization. This is how much of your credit limit you use. Generally speaking, using more than 30% of your credit limit lowers your credit score. For example, if you have a $4,000 balance and a $5,000 credit limit, you’re using 80% of your credit. That would have a large negative impact on your credit score.

What to do about credit card debt

If you’re in credit card debt, the first step to take is to make a plan to pay it off. It’s easy to fall into a cycle of using your card, staying current on the payments, but never actually making any progress on the balance. People who do this often find themselves getting deeper and deeper into debt.

Here’s how to get started:

Stop using your credit cards. When you’re getting charged 20% interest or more, you don’t want to keep adding to your debt.Figure out how much you can pay per month toward your cards. Put all your extra money toward debt, and cut costs where you can. The more you pay, the faster you’ll get out of debt.See if you can refinance your debt. If you have good credit, you may be able to qualify for a balance transfer credit card. These have a 0% intro APR on balance transfers, meaning credit card debt you transfer over, so they can help you save quite a bit on interest. Debt consolidation loans are another option.

The key is paying as much as you can toward your debt. If you only make the minimum payments due, it could take decades to pay off your card’s balance. Because minimum payments are such a small portion of your bill, they barely even cover the interest charges.

Consistency pays off for getting out of credit card debt. Let’s say you have $5,000 in debt at a 22% interest rate. If you’re able to commit to paying $300 per month, you’ll have it paid off in 20 months — less than two years from now. If you can bump that up to $400 per month, you’ll have it paid off in 14 months. You can run the numbers yourself on your exact balance with The Ascent’s credit card interest calculator.

Considering how many people have it, credit card debt could be considered normal. That doesn’t make it any less stressful or damaging to your personal finances. No matter how much credit card debt you have, prioritize paying it off so you can free up your money and stop getting charged interest.

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