Monday, October 3, 2022
Homelife changesStressed about credit card debt? Take these steps to help trim high-interest...

Stressed about credit card debt? Take these steps to help trim high-interest account balances

  • U.S. credit cards balances totaled $841 billion at the end of the first quarter and could remain high.
  • If you are struggling to make minimum payments on credit card balances, there are options to help you reduce the amount you owe and/or minimize the amount of interest you pay on the debt.
  • The only real long-term solution, however, is changing your personal spending habits.

london, ukPeter Muller | Image Source | Getty Images

Few things cause more financial distress and anxiety than a large slug of high-interest rate credit card debt.

Millions of Americans of all income levels carry large balances on credit cards that charge very high interest rates. According to Federal Reserve data, the average annual percentage rate on cards issued by commercial banks was 16.45% at the end of last year, and rates charged by store credit cards can be well over 20%.

While card balances fell significantly from a peak of $927 billion at the end of 2019, they remain high at $841 billion at the end of the first quarter and could continue to grow.

"Credit card debt is still a big issue," said Rachel Gittleman, financial services outreach manager at the Consumer Federation of America. "There were some pay-downs at the beginning of the pandemic, but I think balances may start to rise again with the increases in the cost of living."

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If you are struggling to make minimum payments on credit card balances, there are options to help you reduce the amount you owe and/or minimize the amount of interest you pay on the debt.

There is no silver bullet for high debt, however. The solution begins with changing your own behavior.

"The only long-term solution is to fix your spending habits," said Summer Red, a financial counselor and senior education manager at the Association for Financial Counseling and Planning Education. "Nothing will be successful unless you stick to a reduced spending plan.

"You must get your spending below your income level."

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