As an extension of last week’s Student Loan Payoff Hack, let’s pivot to Consumer Debt! We’re all familiar with pesky credit card debt.
Read below for some Consumer Credit Card Debt stats, followed by some tangible tips to pay down your debt faster, and even increase your credit score while doing it!
The Data:
The last quarter of 2021 saw the largest spike in credit card debt since the New York Federal Reserve began tracking it. Total credit card debt had previously dropped from $930B at the end of 2019 to $770B in early 2021. By end of 2021 though, we were back up to $860B. (A Pandemic that would never end, anyone?) With inflation where it is today, and the interest rate hikes by the Feds, we’re seeing those pair with interest rate hikes on unpaid credit card balances. Currently, the average credit card rate is greater than 16%.
Strategies:
If you have “good credit” (a FICO score of at least 700) a Balance Transfer might be an appropriate vehicle for those committed to paying down debt at a lower interest rate. Check NerdWallet or BankRate online for up-to-date balance transfer deals. Calculate and compare your current pay-down plan against the fees to acquire the balance transfer.
Even those who have not-so-great-credit can use this credit card debt payoff hack that might keep your credit score up while you pay off debt: Pay your credit cards on Fridays. Or once/week on a day that is in sync with your budget.
Making multiple payments regularly lowers your “Credit Utilization Ratio” which measures the amount of available credit you have at any particular time. Making an extra payment, or partial payment, before your statement closing date means the credit card issuer will report a lower balance to the credit bureaus. Just make sure you’re paying at least, or close to, the minimum amount early in the month so can be sure to meet the minimums for that cycle. One missed payment could negatively affect your credit score.
Give it a shot!
Unlocking Abundance 