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Credit card debt in the U.S. has reached record levels, surpassing $1 trillion for the first time. With rising interest rates and inflation straining household budgets, many are finding it harder to manage their financial obligations. As I recently discussed on Yahoo Finance, this trend is concerning—but it’s not insurmountable. Let’s explore some practical steps you can take to regain control of your credit card debt and protect your financial health.
See full video here: Yahoo Finance
Why Is Credit Card Debt at an All-Time High?
Several factors have contributed to this rise in debt. Inflation has made everyday expenses like groceries, gas, and utilities more expensive, leading many to rely on credit cards to bridge the gap. At the same time, interest rates on credit cards have climbed sharply, making it more expensive to carry balances. For those already struggling to pay off their cards, the compounding effect of these higher rates has made it even harder to reduce debt.
Practical Strategies to Reduce Credit Card Debt
While the situation may feel overwhelming, there are steps you can take to tackle your debt effectively:
Focus on High-Interest Balances First
Start by prioritizing the credit cards with the highest interest rates. These balances are costing you the most money over time, so reducing or eliminating them first will have the biggest impact. If possible, pay more than the minimum payment each month to accelerate the process.
Create a Budget and Stick to It
Knowing where your money is going is the first step to regaining control. Track your income and expenses, and identify areas where you can cut back. Allocate a portion of your budget specifically for paying down credit card debt, and make it a priority.
Consider Balance Transfer Offers (Carefully)
Some credit cards offer promotional balance transfer rates, such as 0% interest for a set period. These can be a helpful tool to reduce interest costs, but be mindful of balance transfer fees and the expiration date of the promotional period. Make a plan to pay off the balance before the regular interest rate kicks in.
Limit New Credit Card Spending
Avoid adding to your debt by minimizing new credit card purchases. Consider switching to cash or debit for everyday expenses to prevent your balances from growing further.
Reach Out for Help if Needed
If you’re struggling to make progress, consider speaking with a financial advisor or credit counselor. They can help you create a personalized plan to tackle your debt and offer guidance on managing your finances more effectively.
The Long-Term Impact of High Debt Levels
High credit card debt doesn’t just affect your wallet—it can also impact your credit score, limit your ability to save, and create significant stress. By taking proactive steps to reduce your debt, you can protect your financial future and create more breathing room in your budget.
Final Thoughts
As I mentioned on Yahoo Finance, tackling credit card debt requires discipline and a strategic approach. With interest rates at historic highs, it’s more important than ever to stay on top of your payments and avoid unnecessary expenses. Start with small, actionable steps and build momentum toward becoming debt-free.
Remember, the key to financial health isn’t perfection—it’s progress. Each payment you make brings you one step closer to greater financial freedom. If you’re ready to take control of your credit card debt, don’t hesitate to reach out for guidance—I’m here to help.
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About the Author:
David Peters, CPA, CFP, ChFC, CLU, CPCU, CGMA, is the Founder and Owner of Peters Professional Education (petersprofessionaleducation.com) and Peters Tax Preparation & Consulting, PC. David Peters is also registered with the U.S. Securities and Exchange Commission (SEC) as an Investment Advisor Representative (IAR) with Peters Financial LLC. He regularly teaches courses in accounting, finance, insurance, financial planning, and ethics throughout the United States, and regularly contributes regularly to various professional publications, including NCACPA’s Interim Report, SCACPA’s CPA Report, and VSCPA’s Disclosures.
Required Disclosure:
The content presented above is for informational purposes only, is general in nature, and is not intended to and should not be relied upon or construed as financial, investment, or estate planning advice. This does not constitute an offer to sell or a solicitation to buy any security, investment or planning product. Past performance is not indicative of future results. All investments involve risk, including the possible loss of principal. Please consult with a financial advisor to assess your individual situation.
Financial and investment advisory services offered through Peters Financial LLC. Brokerage and custodial services offered through Charles Schwab Co. Inc., member FINRA and SIPC. Peters Financial LLC and Charles Schwab Co. Inc. are not affiliated. David Peters also offers tax services through Peters Tax Preparation & Consulting, PC. Peters Tax Preparation & Consulting, PC is not affiliated with Peters Financial LLC and clients or prospective clients are never obligated to use Peters Tax Preparation & Consulting, PC. as part of any financial planning or investment management services offered by Peters Financial LLC.
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