Many Americans have credit card debt in 2023. Some have just a little, while others are dealing with a significant amount of high interest debt. It’s becoming increasingly rare to find someone with zero credit card debt.
In this article, we’ll talk about why more Americans have credit card debt. We’ll also discuss some ways you can get out from under it if you have some debt that you can’t seem to pay off.
What’s Causing More Credit Card Debt?
Inflation levels are high, which is one reason more Americans have credit card debt. Inflation means the cost of services and goods keeps increasing. The rising costs are outpacing raises for consumers.
The pandemic also caused many Americans to eat into their savings. Now, the lockdowns have lifted, and many consumers can work again. Still, some families are finding they have less money in savings than before.
If you’re trying to pay off credit card debt, you might consider debt consolidation. Distinguishing between debt consolidation and debt relief is a common confusion point for some Americans, so let’s ensure you understand both terms.
Debt consolidation means you’re refinancing your existing debt. You’re taking out a single loan and using the money from that to pay off all your outstanding debts.
If you have credit card debt on multiple cards, this option might make sense. If you do it, you will only have one entity to pay rather than several. You might also get a more favorable interest rate than a credit card company will offer if you get a loan through a credit union or bank.
As for debt relief, that’s different. That means the entity to which you owe money is forgiving your debt, meaning you don’t have to pay it back.
You might have heard debt forgiveness mentioned lately in the context of student loans. If you have any of those, you’ve likely followed these conversations eagerly.
Regardless of how President Biden’s student loan relief program ends up, the credit card companies are not going to offer you debt relief. That’s why debt consolidation is at least worth considering.
Using Other Payment Methods
Something else worth doing is using other methods besides your credit cards to pay for things unless you feel you have no other choice. For instance, if you’re using your credit cards to pay utility bills, maybe you should get away from that.
Instead, you can get a money order and pay the utility company that way. If you don’t use a credit card except in emergencies, you won’t have to worry about paying that money back. You won’t get in a situation where you’re carrying credit card debt from one pay period to the next, and you’re accumulating interest on the sum you’re carrying as well.
Break Your Credit Card Dependence
Credit cards can be great in some instances. They’re convenient, and you might accumulate points you can use for travel and other perks.
However, more Americans than ever are getting into trouble with them these days. If you are, it’s probably because you’re using one and spending beyond your means. You can’t pay off the full balance when the end of a pay period rolls around.
If you’re in this pattern, you can break the cycle. First, look into debt consolidation. When you do it, you will only have one creditor rather than several. You can probably get a lower interest rate than a credit card company would offer you through a bank or credit union.
You can also stop using credit cards except in emergencies. Instead, you can pay for things in cash, with checks, or with money orders. Any of those options means you’re not racking up credit card bills that you might not be able to pay off at the end of the month.
These changes can make a huge difference if you’re struggling with credit card debt in 2023.