Are you currently carrying a balance on your credit cards? If so, do you have a plan to get rid of that debt?
A January 2018 report from the Federal Reserve highlights the problematic debt that Americans are carrying. Revolving debt, which is primarily credit cards, hit a record high as of November 2017, reaching nearly $1.3 trillion.
This data underlines the importance of reducing credit card debt in order to achieve financial security. Credit cards typically carry much higher interest rates than other types of loans, which can quickly add even more dollars on top of what you already owe.
Learn about what the report’s findings mean for the greater economy, and then start taking steps to knock out your debt.
Revolving credit debt keeps growing
Revolving credit is any type of credit that you can keep using as long as the account is open and payments are made on time. In the case of credit cards, you can spend as much as you want, up to your given limit, and continue accessing more buying power every time you pay down the bill.
The previous record high for revolving debt was $1.021 trillion in April 2008, just around the onset of the recession. Based on current numbers, revolving debt at the end of 2017 is poised to be over $55 billion—more than it was in the fourth quarter of 2016.
Credit card delinquency is rising
The New York Fed’s November 2017 report notes that credit card delinquency rates have reached about 7.5%. On its own, this number is relatively in line with average rates, but when combined with massive student loan delinquency rates and an uptick in auto loan delinquencies, consumers must be careful about balancing debt.
Easy ways to protect yourself from debt
With total outstanding debt in the US at over $3.82 trillion, it’s time to take steps to reduce—and avoid—debt. You can try using these ideas immediately:
Build up your savings
When you’re paying off debt, it can be hard to imagine having any extra money to put towards savings. However, the more you can save, the more you will have to cover yourself in the event of an emergency—this way, you won’t have to rely on borrowing money from credit cards or taking out loans. Make it a priority to save a percentage of your monthly income, even if you start small, so that you’ll have security in the future.
Switch to a reloadable debit card
If you enjoy shopping online, consider switching to a reloadable debit card like the Green Dot 5% Cash Back Visa® Debit Card that you can use anywhere Visa Debit is accepted in the US and earn up to $100 annually. Just load the card with cash, so that you aren’t buying things on credit. Plus, you can even use direct deposit to have your paycheck, government benefits, and even your tax refund loaded to your card. If you don’t have perfect credit because of debt, no worries—you won’t need a credit check to get a card today!
Resolving debt should be a priority for you in 2018, and you’ll need the right tools to do it. Pick up Green Dot’s 5% Cash Back Visa Debit Card and start taking advantage of our money management features. View Green Dot’s simple fees.