What Are You Using Your Credit Card For?

According to recent statistics, credit card users in the U.S. owe a staggering $841 billion, with the average individual carrying a debt of $5,221. This is concerning given that the average credit card interest rate is 16.4%. If one were to spend just one additional dollar and only pay the minimum monthly payment of 3%, paying off that debt would take 39 months, resulting in about $1,547 in interest payments.

Below is a breakdown of what people charge on their credit cards. How does it compare with you?

Tips to Reduce Credit Card Debt

1. Limit Usage: Use your credit card sparingly, primarily for travel bookings.
2. Create a Payment Plan: Trim your budget to prioritize paying off your balance.
3. Keep One Card: Manage only one credit card to simplify debt repayment.
4. Cook at Home: Reduce dining out by preparing meals at home.
5. Balance Transfers: If your credit is good, transfer your balance to a card with a lower interest rate, but avoid accumulating new debt.
6. Consider Consolidation: Look into a consolidation loan with fixed payments for significant debt.
7. Negotiate Rates: Talk to your bank about lowering your credit card interest rate.
8. Seek Help: If facing financial hardship, consider credit counselling.

Conclusion

Maintaining a balance on your credit card can severely impact your financial future and credit score. Aim to pay off your cards and limit yourself to one or two for emergencies. For further guidance, consider resources like Gail Vaz-Oxlade’s book, “Debt-Free Forever: Take Control of Your Money and Your Life.”

 Less Credit Less Temptation - Watch the video below.