Bankrate reposted this
Earlier this week, the Federal Reserve Bank of New York announced that Americans' credit card balances hit a record $1.14 trillion. While this is a shockingly high number, it's important to point out that half of cardholders typically pay in full each month (https://lnkd.in/eGd2qGrc). Their spending counts towards balances but it's not really debt -- not like the other half who are paying an average rate of 20.73 percent. The credit card market represents the proverbial tale of two cities. If you're among those who pay in full, you avoid interest and get benefits such as rewards and buyer protections. But for those who carry debt from month to month, it's so important to pay it down as soon as possible. My favorite tip is to sign up for a new credit card with a generous 0 percent balance transfer promotion (https://lnkd.in/eW7DxGTw). The Citi Simplicity, Wells Fargo Reflect and U.S. Bank Visa Platinum all offer 21 interest-free months. That provides a tremendous tailwind on your debt payoff journey. The credit card market is healthy overall. While delinquencies have risen, banks don't seem particularly concerned. They view this as normalization after being artificially low during the pandemic. Spending is up and credit is still flowing freely. But all news is local. If you're among the half of cardholders who carry debt from month to month, you would lug the average balance (about $6,300, according to TransUnion) around for 18 years if you make minimum payments at 20.73 percent. And you'd owe about $9,500 in interest. That's the big fork in the road. The best way to use a credit card is like a debit card -- paying in full each month to avoid interest but taking advantage of credit cards' superior rewards programs.