If you’re like the average consumer, you carry around $6,000 in credit card debt, per February Experian data.
Unfortunately, experts expect this upward trajectory to continue. Many people will use a credit card to finance a vacation this summer, and the holiday season will be upon us before we know it. Plus, inflation will cause some consumers to continue using their cards to cover living expenses.
In addition, the Federal Reserve’s interest rate hikes have inflated credit card bills for the more than 40% of Americans who carry a balance month to month. The average credit card interest rate is over 20%, making it an expensive way to borrow money.
What You Can Do
If you have credit card debt, your best bet is to tackle it from two directions simultaneously. First, review (or create) your budget. When you critically examine your spending, you’ll likely find ways to save money.
If you find enough savings, you may be able to stop using your credit card to cover your expenses, stopping the bleeding. You might also find some spare cash you can put toward your debt. Use a free budget template to get you started.
Next, create a plan to pay off your credit card debt. For example, you could first focus on your account with the lowest balance. Or, you could initially target your account with the highest interest rate.
Contact your credit card issuers if you can’t afford to make your credit card payments. They may be able to lower your interest rate, waive fees, or put you on a payment plan you can manage.
Remember: Having credit card debt is nothing to be ashamed about. With some careful planning (and maybe a little help), you can dig out of this hole and build a financially comfortable life.
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