Credit card debt is a significant problem in the United States. According to the Consumer Federation of America, 83% of all households have at least one credit card. In addition, the Federal Reserve Bank of Boston estimates that more than 1.1 billion credit cards are held by U.S. consumers (that means the average American has 3.84 credit cards).
And with credit card annual percentage rates hovering close to 20%, on average, and with a total credit card debt that just hit a record $930.6 billion at the end of 2022, we might be setting ourselves up for a few problems.
Consider these statistics released by TransUnion:
That is a problem. And because it is not difficult for credit card use to quickly get out of hand, regularly buying on credit may give you a case of the “credit card blues.”
The following behavior may indicate behavior associated with the credit card blues:
If any of these sound familiar, it is crucial that you take action now and create a plan to pay down your debt to avoid making the problem even worse.
First, make and maintain a worksheet to track your credit card use. You may do this by hand, using colored markers for different creditors, or on a computer spreadsheet. Be sure to include the names of your creditors, the last date of each payment, the annual interest rates, the minimum monthly payments, and the total amounts due.
Here are five simple steps to help you bounce back from debt:
Of course, there are times when using a credit card is unavoidable. However, keep your cards safe, and separate them from your purse or wallet to help prevent theft. Further, do not give your credit card number out on the telephone, particularly if you did not place the call. Shred all carbon receipts and unsolicited or unwanted credit cards or applications.
Remember, your credit card debt will always increase if you are charging more than you are paying. Use your credit cards only for essential purchases. Pay the balance quickly to avoid additional interest or late payments.
A meeting with your financial advisor can help you develop strategies for improving your spending and saving habits to get debt free – and stay that way.