Americans are relying more heavily on their credit cards than ever before, with card balances hitting a record high of $1.08 trillion, as the Federal Reserve Bank of New York reported. Over the past two years, credit card balances have surged by 40%. While many manage their credit card debt reasonably well, there are concerning trends at the household level. More people carry credit card debt from month to month, and fewer can pay off their balances in full.
According to Bankrate.com, 49% of credit card holders now carry debt from month to month, up from 46% the previous year. Fifty-six million cardholders have been in debt for at least a year. The challenging economic environment, inflation, and rising borrowing costs may contribute to these trends. The average credit card interest rate has soared to more than 20%, an all-time high driven by the Federal Reserve’s interest rate hikes.
If you only make minimum payments on an average credit card balance of $6,088, paying off the debt would take over 17 years, costing you more than $9,072 in interest. To combat this, financial experts recommend acknowledging your debt and interest rate, then exploring options like 0% balance transfer cards, which can help you get out of debt in less than two years if used wisely………..[read more]
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