Make Ends Meet: Keeping an eye on credit card debt
LOUISVILLE, Ky. (WAVE) - Everyday, WAVE News viewers share concerns about their families and their finances.
One trap you don’t want to fall into if you are trying your best to make ends meet is whipping out your credit card to pay for something you may want or need.
The pandemic may have been a wakeup call for many Americans. While credit card debt in the United States decreased from 2020 to 2021, credit card users need to know that carrying a balance from month to month can cost big money in interest over time.
Doug Milnes, head of marketing and communications at MoneyGeek, stressed that credit cards and credit card debt is an important part of your financial picture.
“It’s important to use your credit card responsibly,” proclaimed Milnes.
A MoneyGeek study found that the average cardholder in the US still had $5,668 of credit card debt in the second quarter of 2021 which runs between April 1 and June 30.
The good news, Kentucky and Indiana are amongst the states carrying the lowest credit card debt average.
“The average credit card debt in Indiana is $4651,” Milnes shared. “So, it’s less than the national average and Kentucky is also in a similar spot with $4521 credit card debt on average.”
Credit cards helped some Americans get through the pandemic, however credit card debt has the highest interest of any debt you owe. Many Americans have no idea what interest rate their being charged on their credit cards.
“Credit card debt is the thing that can really get out of control if you’re not tightly managing it,” Milnes said. “Your credit card has got the highest interest rates of any debt that you’re gonna have, whether it’s your mortgage, your car loan or a student loan.”
Debt and weight management are two of the most popular New Year’s resolutions, and two of the most significant problems facing millions of Americans today.
“You can actually use a lot of the strategies that you might use on a diet for managing your finances and keeping your budget,” Milnes explained. “It’s important to have that kind of mindset, of like, I’m going on a diet. I’m making myself healthier.”
Inflation is exceeding income growth right now, so many Americans are struggling to make ends meet.
To get your credit card debt under control:
- Pay more than the minimum if you can.
- Create a budget and stick to it.
- Put credit cards on lockdown unless it’s an emergency.
- Stick to cash, or when necessary, a debit card.
- Set a target date for being debt-free.
The worst thing you can do is put your head in the sand and ignore calls from credit card debtors.
“There’s this thing called the ostrich effect, where psychologists found that people want to avoid bad news and they’ll do things like not open their mail if they know they have a big tough bill coming,” Milnes said. “Face your financial situation head on.”
MoneyGeek breaks down the data by age, location, income, and race/ethnicity. See more key findings on its website by clicking or tapping here.
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