According to data from the Federal Deposit Insurance Corporation (FDIC), Americans paid $104 billion in credit card interest and fees over the 12-month period that ended March 31, 2018.

Yes, you read that right – and that’s just the interest and fees.

Here’s what you need to know.


What’s Going On With Credit Card Debt?

According to Make Lemonade, credit card debt is now more than $1 trillion, making it the third largest consumer debt behind mortgages and student loans.

When credit card balances go unpaid, interest and fees can accrue. With the average interest rate on a credit card at 17%, credit card interest can add up quickly.

Plus, the Federal Reserve expects to raise interest rates a total of four times in 2018. Since the Fed has raised interest rates twice this year, you can expect to see interest rates rise again two more times this calendar year.

So, if you have credit card debt, what can you do? Here are five smart financial moves:

1. Consolidate credit card debt with a personal loan

You can consolidate your existing credit card with a personal loan (also known as a credit card consolidation loan). A personal loan is an unsecured loan typically from $1,000 – $100,000 typically with a fixed interest rate that can be used to consolidate debt.

Interest rates on personal loans are often much lower than the interest rates on credit cards, which typically range from 10-20% (or higher).

Here are two ways personal loans can help with credit card debt:

  1. Pay off existing high-interest debt (such as credit card debt) with a lower-interest personal loan
  2. Combine different types of existing debt into a single personal loan to make debt repayment more organized and manageable


2. Transfer your balance to a 0% APR credit card

You can make a balance transfer to a 0% APR credit card.

The process to transfer your credit card balance is simple: a 0% APR credit card offers you a 0% APR on your existing credit card balance for an introductory period (often 12-15 months).

During this period, no interest will accrue on your credit card balance. The goal is to pay off your credit card balance in full before the introductory period ends.


3. Use a personal loan calculator

It’s simple math.

If your credit card interest rate is higher than the interest rate you can receive on a personal loan, then you may be better off financially getting a personal loan to pay off credit card debt.

You can use a personal loan calculator to see how much money you can save when you consolidate credit card debt with a personal loan.


4. Use your credit card to earn rewards and just pay off your bill each month

If you pay off your credit card bill in full each month, then credit cards are a great financial tool.

You can use travel rewards credit cards, for example, to earn free travel, airline tickets and hotel stays.

Or even cash back credit cards to earn back on every dollar you spend.

When you are not paying any interest, credit card rewards are a smart tool to earn free money.


5. Have a financial game plan

Everyone says “have a financial game plan,” but you literally need a financial game plan.

Gather all your debt in one place, and understand the balance and interest rate on each.

Consider refinancing student loans and refinancing mortgages before interest rates rise.

Credit card debt carries a higher interest rate so you can save the most interest by paying credit card debt off first. That said, higher balance loans such as student loans and mortgages may have higher total interest costs so having a broad scale approach is your best bet.




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