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.
- That’s down from 2020, but an issue still worth fixing.
If you have a balance on your credit cards, you are not alone. Many people end up with credit card balances, often due to circumstances such as unexpected bills. And let’s face it, it’s not uncommon to have a sale after the holiday season, when it feels like there’s a lot of pressure to spend.
If you owe money on your credit cards, you might be curious how your balance compares to that of a 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 noticeable drop from 2020, when the average borrower had a balance of $2,906.
But while it’s encouraging to see the average credit card balance decline, a better-case scenario would be for consumers to have no credit card debt at all – or at least you to not have one. With that in mind, here’s how to effectively clear your credit card balance, no matter what.
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 must accrue. This, in turn, could make your debt much more expensive and difficult to repay.
That’s why it’s important to assess your debts and develop a repayment plan. One option is to simply pay off your various cards in order of highest to lowest interest rate. If you cut back on your expenses and temporarily take a second job to earn more money, you may be able to reduce that debt until it’s gone, or at least significantly 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 off. If you do a balance transfer, you may be able to transfer your existing balances to a single credit card with a lower interest rate – or even an introductory rate of 0%.
You can also consider consolidating your credit card balances by taking out a personal loan, using the proceeds from your loan to pay off your various cards, and then paying off your loan in equal monthly installments. The benefit of going this route is that you’ll generally pay less interest on a personal loan than your credit cards will charge, and also you’ll get a fixed interest rate on your loan (whereas l credit card interest may vary).
Get rid of this debt
Maybe you have a lower credit card balance than the typical US consumer, or maybe your balance is much higher. Out of curiosity, this may help you know what the average credit card balance looks like. But at the end of the day, your best decision is to tackle your specific indebtedness, whether high or low. This way, you can stop wasting money on interest and instead focus on achieving your personal financial goals.
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