Strategies to cut down credit card debt as American balances top $1 trillion
Balances are up 34% from the pandemic low of $770 billion in Q1 2021
(InvestigateTV) — The total credit card debt in America has risen to an all-time high of just over $1 trillion, according to the Federal Reserve Bank of New York.
According to Ted Rossman, a senior industry analyst with Bankrate, the main reasons for the increase in credit card usage are inflation, higher interest rates, and waning stimulus money.
But Rossman said he takes a glass half full approach with this new data. While a record high in credit card debt might sound negative, he said that trillion-dollar figure accounts for all balances, not just unpaid.
“It doesn’t distinguish between who pays in full and who doesn’t,” Rossman explained. “We know from our research a little over half the pay in full every month. So, you know, for those people, credit cards are working for them. They’re getting rewards, they’re getting borrower protections. They’re not paying interest.”
For those who are behind on or making late payments, or feeling like they can’t get out from under the debt and only making the minimum payments, Rossman said now is the time to act.
“My top tip would be to sign up for a 0% balance transfer card. These let you move your existing high-cost credit card debt over to a new card that won’t charge you interest for up to 21 months in some cases,” Rossman said. “The Wells Fargo Reflect, the Citi Simplicity and the Citi Diamond are three good examples.”
Rossman said people need to be disciplined in paying off the debt when using this strategy.
He strongly urged those in debt to act now and not put any new debt on the 0% card.
It’s hard to hit a moving target. Rossman said divide what is owed by the number of months in the 0% term and try to stick to that payment.
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