Americans are racking up credit card debt amid rising interest rates and elevated prices. Here’s how much debt each generation carries, per TransUnion.
since March 2022. Since raising rates makes borrowing money more expensive for consumers, the Fed continued to increase them in an effort to slow inflation.Although credit card debt is often caused by practical things such as emergencies or day-to-day living costs, it can be hard to stop racking up more debt once the cycle starts, Rossman says.
Rossman recommends dividing the total amount you owe by the number of months in the interest-free period to come up with a level payment plan you'll be able to stick to. It's important to note that not everyone will qualify for a balance transfer, and sometimes you may not be approved to transfer your total credit card balance. Typically, you need a good to excellent credit score in order to be approved and the likelihood of gaining that approval tends to decrease if your score is below 670,Be sure to keep an eye on any payment deadlines in order to avoid late charges.
This strategy involves applying for a personal loan large enough to cover your total debt. If you're approved, you can pay off your credit cards right away, and then repay the loan at a more favorable rate. The average interest rate for personal loans is a little over 11% as of May 31,If you have a strong credit score, you may be able to get a personal loan with an interest rate as low as around 7% and pay it back over five to seven years, Rossman says.
It's important to note that your credit score may be impacted if you miss a payment and once you've used up all of the funds from your personal loan, you'll need to apply for another one to receive more money.Sign up for our new newsletter!
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