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The average individualcredit card debtis just over $6,500, a 10% increase from 2022 to 2023.
So, why is credit card debt growing and what can consumers do about it?
Based on an Achieve survey,here are six reasons why credit card debt is increasing.
As of November 2024, thenational civilian unemployment ratewas 4.2%.
This is lower than it was during the pandemic, but its higher than its been in recent months.
As a longer-term solution, saving up some extra money for emergencies like layoffs could also help.
This can be especially problematic sincelate fees and penalty APRscan add up.
A potential solution is to set up direct deposit with your employer.
Then, you might schedule automatic payments to come out shortly after your paycheck comes in.
This is due in large part to rising inflation which, as of November 2024, was 2.7%.
Rising costs can be especially concerning for those on a fixed income or already strained budget.
And when credit cards feel like the only way to make ends meet, it only exacerbates this strain.
To combat this, the first step is to stop using credit to pay for things.
At the very least, this will keep your debt from growing as quickly.
For example, you could employ thedebt snowball method.
This entails paying your smallest debt first (while making minimum payments on all other debts).
Paying off debt takes time, so be patient with yourself.
According to Achieve, 3% of consumers experiencerising credit card debtbecause of rising interest rates.
One potential solution is to take a look at your credit score.
If your card issuer doesnt allow that, consider taking out abalance transfer cardwith a 0% introductory rate.
Some programs can help with utility payments, rent, mortgage, or other needs.
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