Expert: Don’t just pay the minimum on your credit card bill
Average card holder has $5,500 in debt
InvestigateTV - Credit card debt reached a record high of $986 billion at the end of 2022, according to the Federal Reserve Bank of New York.
While making the minimum payment can be tempting, particularly if you’re on a tight budget, Bankrate.com’s Ted Rossman said that will only lengthen the amount of time it will take to get out of debt.
“The typical formula, there is just 1% of the balance plus interest, and that’s not nearly enough,” Rossman explained. “You have the average credit card debt, which is about $5,500, according to TransUnion. If you only make minimum payments at the average interest rate, you’ll be in debt for about 17 years and you’ll pay about $7500 in interest.”
Rossman had several tips to tackle significant credit card debt:
- Pay as much as you can above the minimum amount due
- Consider transferring debt from high interest rate cards to a lower or zero rate promotional card
- Research non-profit credit counseling agencies like Money Management International, which can help you create a debt management plan
- For those with good credit, low-rate personal loans can offer rates as low as 7% over the life of the loan
The bottom line: any action towards tackling your debt is a step in the right direction.
The Consumer Financial Protection Bureau (CFPB) has guides on managing debt, consolidating credit card debt, and finding a credit counselor.
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