U.S. Credit Card Balances Just Hit $930 Billion. Here’s How to Manage Yours

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Staying on top of your credit card debt could minimize the financial pain involved. 

America is a nation that’s fairly comfortable with debt. We routinely borrow money to finance home purchases and cars, and those types of debt are very common.

Credit card debt is also pretty common, despite the fact that it can be costly and financially harmful. And unfortunately, it only seems to be on the rise.

As of the fourth quarter of 2022, U.S. credit card balances amounted to $930 billion, according to a recent report by TransUnion. When we compare that to Americans’ collective $785 billion in credit card debt one year prior, it’s clear that we’re looking at a notable uptick. And that’s really not a good thing at all.

Why the increase in credit card debt?

Americans owed a lot more money on their credit cards at the end of 2022 than they did at the end of 2021. And inflation most likely played a big role in that.

Inflation was rampant from the start of 2022 all the way through the end of it. Meanwhile, many consumers depleted their savings accounts during the initial phases of the pandemic to cope with things like income loss and added expenses. So by the time inflation started surging, their safety nets were already gone. That no doubt forced a lot of people to fall back on credit cards when their paychecks could no longer do the job of covering their essential bills.

Getting a handle on your credit card debt

If you owe money on credit cards, your goal should be to eliminate that debt as quickly as you can. First of all, the sooner you do so, the less money you stand to lose to interest.

Also, too high a credit card balance relative to your total spending limit could cause damage to your credit score. So if you’re able to shed some or all of your credit card debt, your credit score might improve nicely.

So how do you go about managing and paying your credit cards? First, take inventory of your debts. Make a list of how much money you owe on each card with a balance, and figure out what interest rate each card is charging you.

From there, you have options. You could attempt to consolidate your debt via a balance transfer and then make a single credit card payment every month. Or, you could tackle your existing balances separately in order of highest interest rate to lowest.

The upside of doing a balance transfer is that many of these cards will give you a 0% introductory APR for a period of time. But you might also pay hefty fees to move your balances over to a new card, so you’ll need to weigh your potential savings against that expense.

Of course, it will take money to pay off that debt, no matter which strategy you use, so to that end, you may need to look at getting a second job or making some serious lifestyle changes. But it pays to do what you can to get out of credit card debt as quickly as possible — even if you have to make some near-term sacrifices to achieve that goal.

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