Most Americans have more than $10K in credit card debt. Here’s how to lower it
Sep 10, 2024, 7:00 PM | Updated: Sep 16, 2024, 4:38 pm
Utahns have the nation's highest debt-to-income ratio according to a new study. The average Utahn is carries a little over $79,000 in debt. (Canva)
(Canva)
SALT LAKE CITY — According to Wallet Hub, most Americans have nearly $11,000 in credit card debt. Additionally, the interest rates on those cards is likely somewhere between 20% and 25%.
Add those interest rates to annual fees, and the credit card company offering to increase your credit limit, and you can see how quickly a person can get into a debt spiral that seems impossible to escape.
But it’s not impossible. The same group that provided the survey, Wallet Hub, offers some solutions.
Putting the brakes on the interest rate
One answer might be to get another credit card, with a lower interest rate.
“What these cards can do for you is they can stop your current credit card interest rate in its tracks, for a while,” said Christie Matherne, an editor at Wallethub. “[These cards] allow you to pay off your debt without adding more interest.
But proceed with caution, Matherne also said. “You’re generally going to need to have good credit, or better, to get a good balanced choice, or, offer from a major bank.”
What does it mean to have good credit? A credit score of 700 or higher. Experian reports that you can make up for less-than-stellar credit if you have a good income, a good payment history, and a good debt-to-credit ratio, among other things.
But, nothing lasts forever
These 0% interest rates are temporary. “These 0% introductory periods are going to be anywhere from 12 to 21 months long,” Metherne said. “That gives you that amount of time to pay off your debt.”
“And you really want to be in the zero-balance range by the time these things end, because they do have regular annual percentage rates that kick in.”
When looking for a lower-interest credit card, be aware of balance transfer fees. They can be between 3% and 5% of the balance you transfer to the new card. Metherne said credit card companies will generally attach this transfer fee to the new credit card. If adding that balance transfer fee to your card puts you over the card’s limit, the company may help you partially pay off the high-interest card.
Or, they could deny the transfer.
For suggestions on the lowest-rate balance transfer credit cards now available, please listen to the podcast above.
