Is your current credit card balance less than $5,589? If so, you have below-average debt.
But no matter what your balance is, now is the perfect time to start paying off that debt. With interest rates rising, unpaid credit card balances could start to have an even bigger impact on your personal finances. The United States recorded a collective debt of $824.8 billion on credit cards in the first quarter (Q1) of 2022, according to Experian.
Debt can function both as a useful tool and as a burden for consumers. When used strategically, credit cards allow individuals and small businesses to responsibly make purchases they otherwise could not afford. Understanding how to stay on top of payments can help you build your credit history and make credit card debt manageable. An added bonus: Learning the ins and outs of credit card perks can net you perks like cash back, travel miles, and 0% introductory interest rates.
For some Americans, the last year of rising prices has forced a greater reliance on credit cards to cover living expenses. In the fourth quarter of 2021, the Federal Reserve Bank of New York reported the largest quarterly increase in credit card debt in 22 years of collecting this data. But when preparing for an economic downturn, as expected will soon impact the US economy, financial experts recommend paying off as much debt as possible.
Experian compiled this list of ways credit card debt can impact your life and analyzed how credit card debt varies by state using data collected from account holders across the country.