Do you have too much unhealthy debt?
- A new survey reveals that the typical American had a credit card balance of $1,847 last year.
- It’s a drop from 2020, but it’s still an issue worth addressing.
If you carry a balance on your credit cards, you’re not alone. Many people end up with credit card balances, often due to circumstances like unplanned bills. And let’s face it: It’s not uncommon to carry a balance after the holiday season, when there seems to be a lot of pressure to spend.
If you owe money on your credit cards, you may be curious how your balance compares to that of the typical borrower. A recent NFCC and Wells Fargo survey may have your answer.
In 2021, the average credit card borrower owed $1,847. That’s a notable drop from 2020, when the average borrower carried a balance of $2,906.
But while it’s encouraging to see the average credit card balance decline, a better case scenario would be if consumers had no credit card debt at all, or at least you had none. With that in mind, here’s how to remove your credit card balance efficiently, no matter what it is.
How to pay off credit card debt
If you owe money on your credit cards, the longer you carry that balance, the more interest you’re bound to accrue. That could, in turn, make your debt much more expensive and difficult to pay.
That’s why it’s important to assess your debts and work out a payment plan. One option is to simply pay off your various cards in order of highest interest rate to lowest. If you cut back on your expenses and take a second job temporarily to earn more money, you may be able to work that debt down until it’s gone, or at least substantially reduced, by the end of the year.
Another option is to consider consolidating your debt to make it easier to manage and less expensive to pay. If you do a balance transfer, you may be able to move your existing balances to a single credit card with a lower interest rate, or even a 0% introductory rate.
You might also consider consolidating your credit card balances by taking out a personal loan, using your loan proceeds to pay off your different cards, and then paying off your loan in equal monthly installments. The benefit of going this route is that you’ll typically pay less interest on a personal loan than your credit cards will, and you’ll also enjoy a fixed interest rate on your loan (whereas credit card interest can be variable). ) .
Get rid of that debt
Maybe you have a lower credit card balance than the typical American consumer, or maybe your balance is much higher. Out of curiosity, it may be helpful to know what the average credit card balance is. But ultimately, the best thing you can do is address your specific debt load, no matter how high or low. That way, you can stop wasting money on interest and instead focus on reaching your personal financial goals.
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