With interest rates quickly increasing and prices soaring due to inflation, accumulating credit card debt is among one the biggest regrets for Americans. A new survey finds that one in five people would rather let someone read through their text messages than show them their credit history.
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The survey from Upgraded Points finds that 35% of respondents said they immediately regretted a credit card purchase. In addition, 24% say they would rather go to the dentist than share their credit history with their partner.
Impulse buys, which provide instant gratification, are also big regrets, with 36% of respondents saying they bought something on their credit card they couldn’t afford but didn’t want to wait for.
According to Creditcards.com, the average credit card interest rate is 17.46% as of July 20, and with the Federal Reserve set to increase rates once again on July 27, this will likely continue to go up and “would cause average credit card rates to quickly rise to all-time record highs.”
“Now that the Fed is increasing rates at its fastest pace in decades, credit card issuers are adapting quickly with equivalent rate increases of their own. As a result, consumers are seeing card offers change at a dizzying pace, with several credit cards now advertising higher rates than they’ve advertised in years,” according to Creditcards.com.
In turn, “such an aggressive approach could help curb further price growth, but it is unlikely to help borrowers who are already in debt. With more rate hikes on the way, borrowers who are already contending with far higher rates than they dealt with even just months ago will have little time to pay off their current balances before their APRs increase again,” Creditcards.com added.
Along with the increase in rates, there is also an increase in debt. According to the Federal Reserve Bank of New York, credit card balances are $71 billion higher than in the first quarter of 2021 and represent a significant year-over-year increase.
According to the Upgraded Points website Senior Content Contributor and founder and CEO of AuPACS, Stephen Au said setting up autopay on your credit cards and forgetting about it, is the best way to go. “It’s automated and will help you maintain perfect payment history for your credit score.”
Ted Rossman, senior industry analyst at CreditCards.com, told GOBankingRates that many people are afraid to look at their credit card statements because they can be overwhelming.
“TransUnion says the average American has a credit card balance of $5,010. Credit cardholders carry balances from month to month on 40% of accounts, the American Bankers Association says. The average credit card rate is 17.25%, which is approaching a record high,” Rossman said.
He added that credit card debt is easy to get into and hard to get out of, with half of people having credit card debt for at least a year and about a third having had it for at least two years.
“If you only make minimum payments toward the average balance at the average interest rate, you’ll be in debt for more than 15 years and will owe about $6,000 in interest. That’s an unpleasant reality, but there are some things that you can do to help,” he said.
Rossman says his top tip is to sign up for a 0% balance transfer card, which can pause the interest clock for up to 21 months.
“Other good strategies might include using a low-rate personal loan as a form of debt consolidation or engaging with a reputable nonprofit credit counseling agency such as Money Management International,” he said.
In addition, personal loan rates go as low as about 6% over five years if you have good credit, and debt management plans offered by reputable credit counselors often have similar terms and are more widely available, he said.
“The fundamentals matter, too. Turbocharge your debt payoff strategy by looking for ways to increase your income and/or lower your expenses. Ideas might include taking on a side hustle, selling stuff you don’t need or canceling little-used subscription services and dining out less frequently,” he added.
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