Credit card debt burdens nearly half of Americans, survey says: Here’s how to pay yours down

Amidst high inflation, Americans are struggling to pay off their credit card debt.  (iStock)

Credit card debt burdens about 46% of Americans and the average person has an outstanding balance of $6,093, according to a survey by the real estate data company, Clever. 

The survey also said that credit card debt disproportionally affects older Americans. Baby boomers hold 157% more credit card debt than Gen Zers and 33% more than millennials. Baby boomers also owe $8,208 on average in credit card debt, while millennials owe an average of $6,182 and Gen Zers carry an average balance of $3,196.

In September, the Federal Reserve hiked interest rates for the fifth time this year by 0.75 percentage points. And it's expected to continue raising rates to combat inflation into next year, which could increase the interest rate on your credit cards. 

If you’re struggling with high-interest debt, a personal loan could help you pay it off at a lower interest rate and reduce your monthly payments. You can visit Credible to compare personal loan rates from multiple lenders at once without affecting your credit score.

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Funding necessities takes priority over credit card debt

Amid high inflation, many Americans (50%) have fallen behind on their credit card payments to cover basic necessities like food, housing or utilities, the survey said. 

About a third of respondents (31%) said they missed credit card payments to buy food or groceries, while 29% did so to cover utilities and 26% said they skipped payments to prioritize other forms of debt. 

If you’re struggling with debt, you can use a personal loan to consolidate it at a lower interest rate. An online marketplace like Credible can help you compare personal loan rates to find a lender that works for you. 

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Credit cards rank as the most stressful form of debt

Amid the possibility of a looming recession, credit cards ranked as the most stressful source of debt, according to Clever's survey. It said that 84% of Americans with credit card debt are stressed and 20% of them are extremely stressed. Furthermore, 11% of those in debt said it’ll take them more than five years to get back on their feet, while 3% said they will never get out of debt. Even those who are not currently in debt were pessimistic. 

"Of the 54% of Americans who aren't currently in credit card debt, two-thirds (66%) worry they could soon go into debt for the first time amid economic uncertainty," Clever said in its survey.

Whether you’re in credit card debt or fear that you’ll soon fall behind on your payments, Credible can help. You can speak to a personal loan expert at Credible to see if this financial product is the right option for you. 

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How to pay down credit card debt quickly

If credit card debt is holding you down, you have a few options that can get you back on track. Here are some tips on ways to pay off your credit cards:

Come up with a credit card repayment plan

If you have multiple credit cards, there are several ways to approach paying down your debt. For example, cardholders can focus on paying off the one with the smallest balance first, known as the debt snowball method. Or they can first pay off the card with the highest interest rate, known as the debt avalanche method. Credit card companies are required to report the interest rate and APRs of your cards on your statements. Take a look at these and begin chipping away at the biggest ones. 

Consumers should also strive to make more than the minimum credit card payment. This will help you pay less interest over time and improve your credit score. 

Compare balance transfer cards

Balance transfer cards, which are also called debt consolidation cards, allow you to move your credit card balances to a new credit card. Many balance transfer cards offer a 0% interest period that can last 12 months or longer. This means you won’t owe any interest on your balance for that period, and all payments will go toward the principal balance.

If you’re interested in a balance transfer card, Credible can help you compare multiple options without affecting your credit score. 

Apply for a cash-out refinance on your mortgage 

If you have outstanding non-mortgage debt and equity in your home, you may benefit from a cash-out refinance. Through a cash-out refinance, you replace your mortgage with a new, larger loan. You then get the difference between your new loan and what you still owe on your home in cash, which can be used to pay off high-interest debts such as card cards. 

If you’re interested in this option, you can visit Credible to compare multiple mortgage refinance lenders, all in one place.

Pay off credit card debt with a personal loan

You can also bundle high-interest debt into a debt consolidation loan, which is a type of personal loan, at a lower rate. The average credit card interest rate was 18.43% as of August, according to Federal Reserve data. Meanwhile, Credible data showed that rates for personal loans can be as low as 4.99%. 

Your interest rate depends on factors such as your credit score and the lender’s discretion. You can use the Credible marketplace to help you compare different personal loan lenders and find your personalized interest rate in minutes.

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