PHOENIX — Americans are now holding the highest amount of credit card debt ever.
In total, the Federal Reserve Bank of New York says credit card balances are at $1.13 trillion.
"I think that a lot of what we're seeing with credit card debt now is people struggling, needing a card is a de facto emergency fund or needing it to help them make ends meet as, as inflation kind of hangs on," Matt Schulz, Chief Credit Analyst at LendingTree said.
$4,000 to $7,000 in debt
Depending on the source, Arizonans are carrying anywhere between $4,000 and a little over $7,000 in credit card debt on average.
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Depending on the source, Arizonans are carrying anywhere between $4,000 and a little over $7,000 in credit card debt on average.
Rising interest rates
Schulz adds what's also the highest it's ever been are credit card interest rates, which are now averaging between 24% and 25%.
Plus, Schulz said delinquencies are the highest they've been in the past decade. Delinquencies currently sit at 3.1% according to the Federal Reserve Bank of New York.
"They are certainly climbing and that's a troubling thing, especially when you consider that inflation is still around, interest rates are really high, and a lot of people haven't quite started repaying their student loan payments," Schulz said.
Arizonans did increase their credit card debt in the final quarter of 2023, according to a LendingTree analysis.
Tackling credit card balances
Schulz said there are things that can help to tackle credit card balances.
"One of the best tools that you can have is a 0% balance transfer credit card, and those are still widely available," Schulz said.
However, Schulz said those cards do require a decent credit score, so another option is a low-interest personal loan to pay off credit card debt.
Another step Schulz said borrowers can take is calling a credit card issuer to ask about reducing the interest rate or skipping a payment due to a short-term financial rough patch.
"We found that about 76% of folks who asked for a lower interest rate on their credit card had gotten one," Schulz said of a LendingTree survey. "And the average reduction was about six percentage points. So that's, that's really significant."
If a borrower has multiple cards to pay off, there are two main methods to tackling the balances. Both require that the borrower pay the minimum payment on all of the cards.
Paying off credit cards
With the debt snowball, any extra money is put towards the smallest debt first, then as balances are paid off, the money is rolled into the next highest debt.
The other method is the debt avalanche, where the extra money is put towards the highest interest rate first.
"Ultimately, what both of those debt payoff plans are about is getting that debt conquered and getting it out of your life. And the best debt payoff plan is the one that's going to keep you motivated and that you're going to stick to," Schulz said.
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