Yesterday, the Federal Reserve released a new report, which WalletHub used as the basis for its Q1 Credit Card Debt Study, concluding that U.S. consumers repaid $31.5 billion in credit card debt during the first quarter of 2017. Credit card debt statistics speak to the financial health of American households. And they can foretell overleveraging bubbles that may trigger constriction across lending markets. From that perspective, the $89.4 billion in new credit card debt that we added to our tab in 2016 represents serious cause for concern. And the fact that we repaid $31.5 billion of our debt during the first quarter of 2017 actually provides little reason for comfort. This and more from WalletHub below.
This first-quarter paydown is a 14% improvement relative to the same quarter last year. But it is 5% below the post-Great Recession average Q1 paydown. Based on these early returns, WalletHub projects that we will end 2017 with more than $60 billion in new credit card debt. That would mean we’d owe well over $1 trillion in credit card debt overall.
With that in mind, here are some tips that consumers should follow to reach debt freedom as quickly and inexpensively as possible:
- Make a Budget & Stick to It – Rank-order your expenses and trim the fat until the amount you earn exceeds the amount you spend.
- Build an Emergency Fund – Your goal should be to gradually save about a year’s worth of after-tax income through monthly contributions to an emergency account.
- Improve Your Credit – A higher credit score will help you save on everything from loans and lines of credit to insurance policies.
- Transfer a Balance – You can save a boatload on finance charges by transferring your debt to a 0% balance transfer credit card.
- Pay Off Your Most Expensive Debt First – Devote the majority of your monthly debt payment to the balance with the highest interest rate, while making minimum payments on any other balances you may owe. Then repeat.
For the full report and a complete explanation of these tips, please visit: