In a report published in mid-May by the Federal Reserve Bank of New York, it was known that US household debt reached $18.8 trillion in the first quarter of this year alonerepresenting one of the highest levels in the midst of strong inflation that hits consumers’ pockets hard.
From the historical figure, About $1.25 billion dollars are part of the current debt accumulated in style on credit cards, compared to the $1.18 trillion recorded in the fourth quarter of last year.
According to reports from LendingTree, holders have on average up to $7,800 in credit card debt, And while there is no single number that indicates when credit card debt is too much, according to Alex Duffy, an independent agent and retirement expert, “any amount that causes stress, consumes too much of your income or does not allow you to save for your future is too much,” he told CBS.
While, for Kim Chambers, card product manager at Georgia’s Have Credit Union, “credit card debt can be considered too high if it stops being a tool and becomes a heavy burden to manage,” she added.
For her part, Bobbi Rebell, certified financial planner and personal finance expert, adds that The figure must be below 30% of your available credit. “Having that margin gives you flexibility and also protects your credit score,” he said.
In this sense, the finance expert commented that The current situation has created a difficult environment for credit card debtwith record balances and interest rates also at historic levels, especially when inflation continues to rise and daily expenses are higher, driving consumers to the inevitable use of credit.
So, if you are going through very high debt, here we explain 4 ways to pay credit card debt in the face of growing inflation, according to expert advice:
Concentrate your debts on a single card
Many consumers do not have a clear view of how much their total debt is because they have it spread across several cards; The best thing that Matt Schulz, chief credit analyst at LendingTree, recommends is to consolidate it all into one; You could even benefit if the transfer is 0% balance, as many offer interest-free initial phases. “A 0% balance transfer credit card is practically the best weapon people have against credit card debt,” he said.
Get the lowest interest rate
According to data from LendingTree, The average rate for a new credit card is about 23%, but according to Schulz, this can be negotiated, since, according to the expert, those who request this adjustment can obtain a reduction of five, six or seven percentage points, which is really significant for their debt.
snowball method
Although there are many methods to pay, Some finance experts recommend doing it using the snowball method.which is basically choosing to pay the smallest balances first until the entire debt is paid. “The best method for paying off credit card debt is the one you are most likely to stick with,” Schulz said.
Keep reading:
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- More than 50% of Americans say they are in debt due to rising energy costs, according to WalletHub
