CHICOPEE, Mass. (WWLP) – Credit card debt in the U.S. has hit a new high, and many people are struggling to pay the bills.
Many people tend to carry a balance on their credit cards month to month, but reaching for your credit card too often can have a big impact on your credit. Total credit card debt reached a record $930.6 billion in the fourth quarter of 2022, according to the latest credit report from TransUnion.
According to the latest quarterly report from the Federal Reserve, 46 percent of credit cardholders carry debt from month to month on at least one card. Not only can this lower your credit score, but sky-high interest rates also make credit cards one of the most expensive ways to borrow money.
The first thing you should do if you are carrying a balance is to start paying at least the minimum balance on time. As balances rise, financial experts suggest looking for a zero percent balance transfer credit card.
Make a list of all your debt and make a note of the type of debt you have whether it’s student loans or your car payment, and what are the interest rates for each of those. Then, figure out the maximum you can pay every month. Look into how much you need to pay for necessities such as rent/mortgage, utilities, and food to then be able to determine what you can afford to pay for everything each month. Then ultimately financial advisors recommend picking a debt repayment strategy that’s right for you such as the 50/30/20 approach or even the snowball method.
You can speed up your debt repayment and get out of debt fast by reviewing your monthly expenses and looking for ways to cut your costs.