Average credit card debt and how it affects you

The average credit card debt can be shocking. Unfortunately, most Americans are overburdened with credit card debt.

Consider these facts:

Most (general) credit cards: (cards in circulation in 2008)

1st Hunt – 119.4 million
2. Citi – 92 million
3. Bank of America – 80.2 million
4. Discover – 48 million
5. American Express – 46.5 million
6. Capital One – 46.3 million
7. HSBC – 38.8 million
8. GE Money – 27.2 million
9th target – 23.4 million
10. Wells Fargo – 17.3 million
(Original source: Nilson Report, February 2009)

That’s a lot of credit cards! The truth is that the average American household with at least one credit card has nearly $10,700 in credit card debt, according to CardWeb.com. The average credit card interest rate is usually in the mid-teens if not higher, with some APRs as high as 30%! Faced with this scary fact, you want to know the best way to reduce your average credit card debt as quickly as possible.

Summary of Best Ways to Reduce Average Credit Card Debt:

* Use debt for the right purposes like mortgages and student loans
* Pay off your higher-interest credit card debt first
* Pay more than the minimum amounts on your credit card payments
* Watch what you spend and cut back where you can
* Loans from lenders with the best interest rates
* Build savings as a cash reserve for unexpected expenses
* Pay off higher-interest debt before you pay off your mortgage
* Seek professional debt help when you need it

Tips to lower your average credit card debt

Not all debt is bad. Believe it or not, in some circumstances, being in debt is actually a good thing because it can help you have a good credit score. This is important if you need credit for things like mortgages or student loans.

Borrowing money for a mortgage or college education is a good use of credit. Make sure you only borrow within your limits so you can repay your loans. Also, look around and find the best loan terms and interest rates. Another advantage of a mortgage loan is that the interest is often tax deductible.

Aside from home loans and student loans, most revolving debt isn’t smart. Don’t get into the habit of using credit cards for consumables like meals and vacations if you can’t afford to pay your monthly bill quickly. There’s no point in paying interest on these things, and if you’re using a credit card for a living, you’ll quickly end up piling on more debt.

Always put some money aside for these necessities and pay off your bills quickly. If you want to buy something that’s in excess of your monthly budget, save up a few paychecks so you can avoid putting it on a credit card.

Stay in control of your spending. It’s too easy to get into debt and acquire thousands of dollars without even realizing what happened. Don’t make this mistake or it can take a very long time to dig out and pay off the credit cards because of the interest payments.

Keep track of your expenses and/or collect receipts. Knowing how much you spend can help increase awareness of where your money is going. Cut down on spending on unnecessary items and save the money or use it to pay off other debts faster.

Pay off the cards and loans with the highest interest rates first. If you really want to get out of debt faster, focus on paying off those cards and loans with the higher interest rates. Also, make at least the minimum payment, if not more, on your other debts. Take the cards in order and pay them off one at a time from the highest interest rate to the lowest, and once one card is paid off, move on to the next.

Don’t just pay the minimum amount. If you only pay the minimum amount due on your credit cards, you’re lucky enough to pay more than just the interest, and it’s going to take a very long time to pay that bill. Also, you will spend a lot on interest payments during the life of the loan.

Borrow from the right places. While you might be tempted to borrow money from your retirement savings or take out a home loan to reduce your average credit card debt, doing so can also be risky. You can pay hefty penalties and taxes on withdrawals from a retirement plan, and if you can’t pay off a home loan, you could even lose your home.

Prepare for the unexpected. It’s always a good idea to have some savings in reserve in case you suffer an unexpected life event or emergency. For example, a major car or home repair or an illness can quickly wipe out your savings.

Don’t assume that you should pay off your mortgage first. You may want to pay off other debts faster than your mortgage because it’s usually a lower interest rate. Also, they often allow you to deduct at least some of the interest from your taxes. If your mortgage has a high interest rate, try refinancing it instead.

Get help when you’re in trouble. If you have a lot more debt than you can handle, get professional help. There are many helpful debt management and counseling agencies that can help you consolidate your debt. They can also help you understand and better manage finances. Just do your research to choose a reputable company.

These average credit card debt reduction tips are great techniques to use today and take responsibility for getting out of debt fast!

As long as you have the willpower to use these techniques, you will begin to relieve the pressure of too much debt.