Credit card debts reach the highest peak

According to a survey carried out by the Federal Reserve, credit card debts in the United States have reached a record high of $1.021 trillion in November 2017. While this highlights a more confident U.S. consumer behavior, it also signals potential trouble in the future.

Credit card usage has increased

The Experian’s annual study on the state of credit and debt in America reveals that credit card balances have never been higher. The average American has a credit card balance of $6,375. The increased popularity of credit card can be explained by the post-recession low rates. The Federal Reserve shows that there is an increase of $11.2 billion when compared to the previous record of $1.021 trillion in April 2008. The increase is reported to be the highest level on record. According to the Director of Public Education at Experian, when consumers are more confident, they start believing that they can manage any new debt.

Get your credit card debt under control

In an email to Consumer Affairs, Matt Schulz, a senior industry analyst at CreditCards.com, argued that this new high record should act as a wake-up call to all the American consumers. In his point of view, they must get their credit card debts under control before it is too late. It is important to remember that interest rate on credit cards will keep on increasing for years to come.

Try the snowball method

The snowball method is one of the most effective ways to pay off your credit card debt. It is simply a debt reduction strategy where you pay off your debts in order of smallest to largest. If you have several debts, pay off your lowest debts first. The aim is to create a momentum in your debt ball. According to research, if you start by paying off the biggest debt, you may lose motivation or focus. Therefore, it is essential that you pay your debts in a way that keeps you motivated till the end.

The debt avalanche is a popular repayment strategy

The debt avalanche is a great repayment strategy where credit card users pay off debts with higher interest rates followed by minimum payments on other loans. Interest rates keep on growing and this can be a burden on your financial situation. Paying off high-interest debts can help you tackle your debt issue quicker and more effectively.

Consider a debt consolidation loan

If you have too many debts to pay, debt consolidation loans may help you. Debt consolidation is the combination of several unsecured debts into one single bill with a lower interest rate. This process allows you to lower your monthly payment. However, you have to make sure that you choose the right loan consolidation strategy.

Resist the temptation

The best and simplest way to avoid having too many debts is to resist the temptation of buying things you don’t really need. Change your buying habits if necessary and learn how to manage your budget properly. Paying off credit card debts is not as complicated as it may seem. You simply need to find the right method or strategy that suits your financial situation.

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