US credit card debt hits all-time high of $930 billion

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Credit card debt hit a record high of $930 billion for Americans in the last quarter of 2019, the latest data by the Federal Reserve Bank of New York, published February 11.

That’s a $46 billion increase in credit card balances sequentially and an alarming $57 billion increase from the same period in 2018. The Fed’s report highlights America’s growing debt problem and the increased risk facing younger consumers .

Fast facts: credit card debt and delinquency rates

  • US credit debt hit an all-time high at $930 billion
  • During the 2008 financial crisis, the debt peaked at $870 billion
  • Loan default rates rose 0.16% sequentially to 5.32%
  • Younger Americans (18 to 29) have a 76% higher crime rate than anyone else

Credit card delinquency rates — which represent the proportion of payments that are 90 days or more late — also rose to 5.32%, up from 5.16% in the previous quarter.

“The data also shows that transitions into default among credit card borrowers have steadily increased since 2016, especially among younger borrowers,” said Wilbert Van Der Klaauw, senior vice president at the New York Fed, in the press release.

The youngest Americans (18 to 29) suffer the highest delinquency rates at 9.36%. That’s 76% higher than the overall average credit card default rate.

Older Americans (50+) have delinquency rates below 5%, which tends to coincide with their increased wealth compared to younger generations.

Here’s a breakdown of credit card delinquencies by age:

  • 18 to 29: 9.36%
  • 30 to 39: 6.05%
  • 40 to 49: 5.64%
  • 50 to 59: 4.79%
  • 60 to 69: 4.34%
  • 70+: 4.26%

If you are one of the many Americans who struggle with this Pay off credit card debtthere’s no time like the present to start chopping. Choose contains some tips on how to tackle debt, perhaps by using a credit card to your advantage.

Use a credit card to transfer the balance

When you want to get rid of your credit card debt, opening a new credit card may not be your first thought.

But you can transfer debt from high-yield credit cards to a Credit card transferwhich offers no interest for up to 21 months.

By performing a balance transfer, you can save a significant amount on interest charges and transfer any payments you make to your principal balance (instead of the principal plus interest charges).

If you want to maximize interest-free periods, consider this Citi Simplicity® card with an introductory 0% APR for 21 months on balance transfers from the date of first transfer (14.99% to 24.99% variable APR thereafter; balance transfers must be completed within four months of account opening). Wells Fargo Reflect℠ cardwhich offers an introductory period of 0% APR up to 21 months from account opening for qualifying balance transfers (thereafter 13.24% – 25.24% variable APR, cf Prices and Fees). The introductory fund transfer fee for the Reflect card is 3% ($5 minimum), whichever is greater, of the amount of each fund transfer for 120 days from account opening. After that, it’s up to 5% for each balance transfer with a minimum of $5.

Note that balance transfer cards often have maximum limits on the amount of debt you can transfer (either a percentage of your total credit limit or a set dollar amount), and you cannot transfer between cards issued by the same bank. Be sure to read the fine print before requesting a transfer. Good or excellent credit are often required to qualify for a transfer of funds credit card.

Before you perform a balance transfer, make sure you have a repayment plan in place so you can pay off the debt before the end of the 0% APR introductory period. Otherwise, you end up paying interest again on remaining balances.

Fix debt with a personal loan

If you have large debts, consolidating with a personal loan can be a good alternative to balance transfers, which may not cover your entire balance. And depending on your credit rating, you may qualify for a loan amount that covers your entire balance.

A personal loan provides you with a fixed amount of money for a set period of time at a fixed interest rate. While interest rates on personal loans are rarely 0%, they are often lower than keeping a balance on your current credit card(s).

Borrow money from family or friends

If your credit score is below 580, you may have trouble qualifying for a credit card or personal loan. And if you’re hesitant to open a new financial product to pay off an existing one, you can alternatively ask a family member or close friend for a loan.

This option can be useful if your debt is not too high and you have willing family or friends. Just make sure you create a repayment plan before you borrow money and stick to it so you don’t risk damaging your relationship.

Editorial note: Any opinion, analysis, review, or recommendation expressed in this article is solely that of Select’s editors and has not been reviewed, approved, or otherwise endorsed by any third party.

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