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CBS News
4 days ago
- Business
- CBS News
3 things credit card users should be doing now
We may receive commissions from some links to products on this page. Promotions are subject to availability and retailer terms. Changing your online payment method from a credit card to a debit card could make sense now. Getty Images Using your credit card is often quick and effortless, providing an easy way to pay for everyday purchases and online shopping needs. And in the modern era, with credit card numbers being automatically saved to your online accounts, it feels like making purchases is easier than ever. But that ease can come with dangerous risks if your credit card spending isn't managed properly, as was seen recently, when a new report showed credit card balances up 6% year-over-year. Considering that the average credit card balance is close to $8,000 now and the average credit card interest rate is around 21% (down from a record high last year), it becomes even clearer that the simplicity associated with credit card usage has resulted in significant amounts of debt for many Americans. If you're one of those credit card users – or are looking to avoid becoming one – some tried and true techniques are worth remembering (and utilizing) right now. Below, we'll break down three things to consider doing in today's economic climate. Start by checking your credit card debt relief eligibility requirements here. 3 things credit card users should be doing now Here are three things credit card users should be doing now: Use cash and debit cards more frequently This may seem obvious, but if you want to improve your debt situation, you'll need to make some small but important changes, like using cash and debit cards more frequently, preferably in place of the expenses you're currently using your credit card for. What does this mean in practical terms? It may be as simple as changing your payment methods on your online accounts to your debit card from your existing credit cards. It may also mean giving yourself an "allowance" of cash to use from each paycheck (post-expenses paid). When that runs out, you're out of discretionary spending money until you get paid again. Sure, this may come at the expense of reduced credit card rewards and points, but if you've been racking those up by accumulating high-rate credit card debt, those rewards are not nearly as advantageous as they appear on paper. Learn more about the ways to reduce your debt here. Look for ways to consolidate your debt and lower your rates Don't want to turn to cash or your debit card? That's understandable, but it doesn't mean you need to continue to pay a high interest rate on your credit card, either, particularly when there are attractive balance transfer credit card alternatives and much lower-rate debt consolidation loan offers on the market now. The average personal loan rate, for example, is almost 10 percentage points lower than the median credit card rate right now. Balance transfer cards, meanwhile, come with low or 0% introductory rates for qualified users, giving you an easy way to pay more toward your principal balance each month. Just be sure to take advantage of that limited window of opportunity as rates will change here over time. And, more importantly, take a closer look at the spending habits that put you in this financial dilemma to begin with. Without addressing (and resolving) that first, a balance transfer card or debt consolidation loan won't be as effective. Speak with a debt relief servicer about high balances Some credit card debt balances are manageable with due diligence, consistency and the techniques outlined above … and some are not. And if you're a credit card user struggling to pay down, or even make a significant reduction in your balance, it's worth speaking with a debt relief service provider to discuss the next steps. A conversation with a representative is non-committal but informative, allowing you to better understand your current situation and, importantly, potential resolutions. With options ranging from credit counseling to debt management programs to credit card debt forgiveness for higher balances, there's like a debt relief solution applicable to your situation. But you won't know which is right or how to get started until you reach out for help. Chat with a debt relief specialist to determine your next move. The bottom line While the above moves can make sense for a wide range of credit card users, they're certainly not the only items worth addressing now. But they're a good starting point for credit card users who want to maintain their financial health and improve their credit card use approach. By doing these three things now, these users can start the delayed work of paying down their debt balances and, more importantly, regaining their financial independence and well-being.
CBS News
19-05-2025
- Business
- CBS News
3 critical credit card debt considerations borrowers should make now
We may receive commissions from some links to products on this page. Promotions are subject to availability and retailer terms. The path toward credit card debt relief may involve acknowledging some unfortunate realities in today's economic climate. MilanNews last week that credit card balances are falling was welcomed by American borrowers, but it may have masked what still appears to be a credible issue: millions of Americans are still struggling to pay off all that they've accumulated. Credit card balances in the first quarter of 2025 were at a combined $1.18 trillion, and while that's a decline from the final quarter of 2024, it still represents a 6% increase compared to the same time period last year. Add in the fact that the average credit card debt balance is close to $8,000 right now and that credit card interest rates are only marginally down from a recent record 23% and it becomes even clearer that the path toward financial freedom is still a ways off for many. That all noted, there may be some credit card users with a large debt load, or with a card with an interest rate above that average, who are considering staying on their current path anyway. With a variety of debt relief options that can be personalized to your needs, this could be a mistake. However, it helps to know what to consider to better inform your next steps toward a final credit card debt payoff solution. Below, we'll break down three critical credit card debt considerations borrowers should make now. Start by checking your credit card debt forgiveness eligibility here. 3 critical credit card debt considerations borrowers should make now Here are three items credit card users should be thinking about right now: Consideration: Credit card interest rates will remain high Credit card interest rates are driven by a variety of factors, from the federal funds rate to the prime rate and more. But the reality is that credit card interest rates are unlikely to decline materially at any time soon. For context, credit card interest rates hit a record high last fall, directly in the middle of the Federal Reserve's interest rate cut campaign. And rates there have been paused so far in 2025. Even when a cut is issued, though, as many expect at some point later this year, it's likely to be by just 25 basis points, which will have a minor impact on credit card rates, if it does at all. Understanding this unfortunate reality, then, credit card users may be better served by exploring ways to get out of debt that won't require major economic changes to help reduce what they currently owe. Explore your top debt relief options here. Consideration: Your debt is compounding Another reason why you should tackle your credit card debt sooner rather than later: it's compounding. Your credit card interest compounds daily, making even the most innocuous initial debt quickly difficult to pay if accumulated on a high-rate credit card. It won't happen overnight (often past the grace period of 21 to 25 days), but it will build up over time, and it'll be to a significant degree if you have anything close to that 23% interest rate. Even above-minimum payments may not be sufficient in these circumstances, leaving you with little recourse besides turning to a debt relief servicer. Consideration: There's probably a debt relief service that fits your circumstances There is a wide variety of important debt relief options worth exploring and likely one that fits your specific circumstances. Ranging from debt consolidation loans to debt management programs to credit counseling, a debt relief service can evaluate your debt situation to determine which is most appropriate for you. In extreme cases, they may even work with you to come up with the appropriate bankruptcy solution. On the other hand, depending on your qualifications, you may be eligible to have 30% to 50% of your credit card eliminated with the help of a credit card debt forgiveness program (also known as debt settlement). You won't know which is optimal for your situation, however, until you start doing your research and speaking to professionals. Consider making the move now. Get started with debt relief now. The bottom line The unfortunate but sobering reality is that many American credit card users have debt that won't be reduced by any minor changes in the interest rate climate. It's likely to compound with interest if action isn't taken promptly. But with the right debt relief strategy and a new and consistent approach, the path to financial freedom is achievable, and it can begin now, even in today's uncertain economic climate.
