Welcome back. Friends news. I and I'm Hanna
do and now to stretching your dollar according to a
recent report from the Federal Reserve Bank of New York
Americans have an incredible$986 billion in credit card debt
. So how do you tackle your credit card debt
? Well, to give us some advice, joining
us now we have Ted Rossman senior industry analyst at
bank rate dot com. Welcome back. So first
and foremost, what are some common reasons? People
fall into credit card debt. The biggest explanation is
some sort of emergency expense, some sort of unexpected
medical bill, car repair, home repair, something
like that. A close second is day to day
expenses. And I feel like that's really taken center
stage this past year with inflation being so high.
Yeah, and a lot of people will say,
ok, I'll just pay maybe the minimum every single
month and and and obviously the balance continues to occur
over time. But why you say that that's not
true. That's not really enough to just pay the
minimum balance every month. The minimum payment is enough
to keep you current in the eyes of your creditors
and the Credit Bureaus, but it's not enough to
make progress. The typical formula is 1% of the
balance plus interest. So you're gonna be in debt
forever and ever, ever. Like if you have
the average balance, 5700 bucks according to Transunion at
the average rate, which is a little over 20%
minimum payments will keep you in debt for 17 years
and you'll pay about$8300 in interest. And that
math is rough and that's if you're not accruing more
and adding more to the credit card, you know
. Very true. Yeah, I know it's easier
said than done, but it's so important to pay
this down. My top tip is to get a
0% balance transfer card. Pause that interest clock for
up to 21 months. Move your existing high cost
debt over to one of these new cards. Try
to avoid making new purchases to your earlier point divide
what you owe by the number of months in your
0% term. Try to stick with it. And
according to a report we mentioned earlier, the delinquency
rate among those ages 18 to 25 was more than
8% in the first quarter. So why are millennials
and Gen Z are failing to pay their credit card
bills? I think this is really a cost of
living story as well because rent costs more food costs
more. You know, it's really expensive to get
married and raise kids and buy your first home and
pay off student loans and student loans. Of course
, have been on pause the last few years.
I worry when those payments resume and that's probably gonna
be in the next few months. That's another maybe
$400 a month that people are gonna have to come
up with. So it's really important to have a
plan, a balance transfer card, a side hustle
. There are some other things you can do.
Nonprofit credit counseling can be a great avenue. Maybe
a personal loan is a form of debt. So
yeah, let's go through it a little bit more
. Any other helpful hints for our viewers out there
that wanna start chipping away right now at that credit
card debt, start moving in the right direction and
the other money that you can funnel towards this debt
is impactful. So whether you're taking on a side
hustle or you're selling stuff you don't need or you're
cutting your expenses dollar saved is a dollar earned after
all, try to lower your rate, get that
0% balance transfer card or maybe ask for a lower
rate seek nonprofit credit counseling, use a personal loan
as a form of debt consolidation. You can't just
ignore the problem though and you can't just make minimum
payments, you need to do more than that.
So you alluded to this a moment ago when it
comes to retail store, credit cards, not all
are created equal, walk us through what someone should
know when they're getting those credit cards. Store cards
have special high interest and that's in large part because
they're easier to get. But that can be a
trap. So don't fall for that pitch at the
check out. The only time this works is if
you pay in full to avoid interest and you're loyal
to the store, you shop there enough to make
it worthwhile. A lot of store cards are at
or even over 30% interest. So it's just so
important these are credit products. So it's not just
like a store loyalty program. You need to realize
that it affects your credit score, it has interest
, you wanna have a good plan. Alright.
Thank you. So Rossman, senior industry analyst at
bank rate dot com. Always great advice. Thank
you and more. Wake up next guys. Yeah --> .