Credit card debt reaches record high

(InvestigateTV) — Americans currently have $1.14 trillion in credit card debt, a record high, according to the New York Fed.

This represents an increase of 48% over 2021 and 11% over August 2023.

Ted Rossman of Bankrate said high inflation is a big reason everything is getting more expensive, causing some people to rely more heavily on their credit cards. At the same time, high interest rates that fight inflation make it harder to pay off credit card debt.

He said the average interest rate is around 20.73 percent, also close to a record high.

“If you have the average credit card balance, which TransUnion says is about $6,300, and you’re making minimum payments of 20.73%, you’re in debt for 18 years and paying about $9,500 in interest,” Rossman said. “So we definitely want to come up with a better repayment plan.”

Rossman urged people with credit card debt to first let go of the shame, because many people feel the same way. In fact, half of all credit card holders are in debt every month.

“My favorite idea is to get a zero percent transfer credit card. Cards like Wells Fargo Reflect and Citi Simplicity allow you to pay no interest for up to 21 months,” he said. “They take your existing, expensive debt and transfer it to a new card with a generous zero percent promotion, which can have a huge impact.”

He said you could combine that with other strategies. Maybe you could get a side job, cut back on your spending or sell things you don’t need. He said with interest rates so high, it’s important to make paying off credit card debt a priority.

And if your credit score isn’t great or you’re not sure if you want to apply for another credit card, Rossman says you can also work with a reputable credit counseling agency like Money Management International or GreenPath.

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