At the moment, U.S. credit card debt jumped by $45 billion in the fourth quarter to $1.21 trillion, according to the Federal Reserve, as reported by Forbes.com.
While the central bank did not provide a breakdown, according to TransUnion, it’s likely up to $6,580 from $6,380 quarter over quarter. Unfortunately, it’s only set to get worse – especially when just 10.75% of cardholders are making minimum payments since 2012.
Key Points About This Article
- U.S. credit card debt jumped by $45 billion in the fourth quarter to $1.21 trillion, according to the Federal Reserve, as reported by Forbes.com.
- “About 82% of all US adults have at least one credit card, with the average about four credit cards per US consumer, according to Experian, and the average household has over $21,000 in credit card debt.”
- According to Suze Orman, there is a way to conquer that debt.
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And, according to The Guardian, “About 82% of all US adults have at least one credit card, with the average about four credit cards per US consumer, according to Experian, and the average household has over $21,000 in credit card debt.”
That’s awful.
There is a Way to Tackle Credit Card Debt
But according to Suze Orman, there is a way to conquer that debt. As she says in a recent LinkedIn note, “Can you find $20 or $30 or $50 more to put toward your monthly credit card payment? My challenge is for you to pay more this month than you did last month. Then do it again next month. And again.”
“I think if you can start making this a habit, you will notice you are motivated to find ways to increase your payments even more. Don’t look at the balance. Focus on the fact you are limiting your new purchases to absolute needs (no wants!) and you are paying more each month than in the past. That’s making important progress.”
Orman also suggests using debit cards instead of credit cards.
Unless you can pay off your entire credit card bill every month, avoid using credit cards. Instead, rely on cash or debit cards. “There is no more expensive form of bondage than spending more than you have and paying interest of 15% or more on your credit card,” Orman said, as quoted by GoBankingRates.com.
Orman also advises cutting back on bad habits, such as buying coffee
Right now, the average cup of coffee can cost about $7. If you got coffee once or twice a week, it’s not too bad. But if you’re doing it every day – which many of us do- it’s costing you $210 a month, and $2,520 a year.
“It would be one thing if you had a cup of coffee once a week, maybe three times a month, but that’s not what you do. You go in every single day,” she added, as quoted by Yahoo Finance.
While $2,520 may not sound like a lot, if done over 40 years it’s $100,800 for coffee.
What makes that worse is that many people use credit cards for that expense, don’t pay off the full balance, and wind up paying for coffee plus credit card interest for buying that coffee.
In addition, “For you to have money, you have to learn to live below your means but within your needs. How do you do that? You do that by simply purchasing needs versus wants. What is a need? Need is food that you buy at a grocery store. What is a want? A want is going out to eat at a restaurant and doing it over and over again.”
Stop Going Out to Eat So Much, Too
Going out to eat contributes to massive credit card debt, too, which can weigh on you in retirement. Most people don’t realize how much money they spend by heading to the drive-through or going out to a fancy restaurant once in a while. Some of us, including me, stop by Dunkin every morning and spend about $20 on coffee and a hot bagel, which comes out to about $600 a month.
And if you really want to go out to eat or buy more coffee, debit it or pay for it with cash. The last thing you want to do is rack up more credit card debt, plus interest because you think it’s easier to just use your credit card.
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