Credit card debt has been skyrocketing, with total debt reaching a record $930.6 billion at the end of 2022, according to a report by TransUnion. The average balance also rose to $5,805 during the same period. This increase in debt has caused concern, with many experts warning that households are nearing a "breaking point". In fact, a study by WalletHub shows that households are approaching the level of credit card debt that will become unsustainable for most people.
TransUnion's report also found that delinquencies are on the rise, with payments that are 60 days or more overdue increasing. Michele Raneri, Vice President of U.S. Research and Consulting at TransUnion, notes that the increase in delinquencies is something to watch, and if unemployment goes up, it could signal a longer-term problem.
Credit cards are one of the most expensive ways to borrow money, with annual percentage rates currently around 20%, an all-time high. If the Federal Reserve announces a half-point increase in its benchmark interest rate, those APRs will climb even higher, costing credit card borrowers an extra $3.4 billion in interest charges over the next 12 months.
To tackle credit card debt, experts suggest reining in spending, paying off debt, and avoiding any new debt. Zero percent balance transfer credit card offers are plentiful and remain one of the best weapons Americans have in the battle against credit card debt. Borrowers may also be able to refinance into a lower-interest personal loan, which could provide significant savings. Additionally, taking on a side hustle, selling unneeded items, and cutting expenses can all help pay down credit card debt and save money in the long run.