It looks like Americans really can reduce their credit card debt, at least temporarily. In the first quarter of this year, a new survey by the New York Federal Reserve shows credit card debt went down by 2.4 percent across the country
That’s not as promising as it may look. “We’re not out of the woods,” says Ted Rossman with Bankrate. He points out we start routinely almost every year by consciously spending less. “In the first three months of the year, people are in post-holiday season spending detox,” he explains. “But balances usually rise in the later quarters, and they really spike in the fourth quarter.”
With credit card interest rates averaging more than 20 percent, Rossman urges everyone to push hard for a zero balance, by paying off credit cards every month. He says reaching that goal could mean transferring balances to zero-interest card promotions, taking out a personal loan, or even starting a 'side hustle” job to make extra funds.
“You have to do something,” he exclaims. “If you only make minimum payments, towards an average balance, at the average rate, you’re in debt for 18 years, and you end up paying close to $10,000 in interest. Credit card rates are so much higher that this is one to prioritize.”
Bankrate estimates that only about 55 percent of credit card holders manage to pay off their cards every month and Rossman says high prices, tough times, and unexpected expenses like car or home repairs can push people into unwanted debt. “If you’re in a hole, try to stop digging,” he says. “Try to move your spending to cash or debit. Get on the right side of that group who’s carrying debt, versus paying in full every month.”