According to a study from WalletHub, the total credit card debt of US consumers now exceeds $1 trillion. In fact, last year American consumers took out more than $100 billion of credit card debt, which makes it the highest single-year amount since 2007. On average, each American household owes more than $8600 on their credit cards. Many people believe the accumulation of debt is a reflection of America’s confidence in the economy.
Jill Gonzalez, a senior editor at WalletHub, spoke with ABC news about this crazy occurrence. “We haven’t seen anything like this,” Gonzalez said. “Consumer confidence is at its highest point. Since the recession, people have been saving up for houses, cars … new furniture and appliances, which often get charged on credit cards.”
According to Lend EDU, mortgages are a big reason people are unable to pay their credit card debt. In fact, American homeowners struggling to pay their mortgage increased by 5.2% during the last quarter. And while credit cards are a major part of a person’s finances, they only take up about 9% of the banking industry’s $17.4 trillion in annual business.
In order to stick to your budget and pay off your debt, there are a couple of things you can do. First, take a hard look at what you pay for things each and every month. Then determine the things you actually need to be spending money on — and the things you don’t. For example, is a night out with your friends really worth setting you back $30 or $40? Set a budget and stick to it each month, and don’t go over it.
Figure out which loans you need to pay off first so you can get those out of the way as quickly as possible. If you were to tackle the loan with the highest interest rate, you are getting it out of the way so it doesn’t add up over time even more. You could also pursue refinancing. If you have any home equity that you can delve into, you might consider doing that just as long as you’re not risking losing your home.
The Federal Reserve indicated consumer debt in the United States had reached nearly $3.4 trillion by May 2015. Since then it has only continued to rise — and growing credit card debt is a big reason for that.
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