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Smart Strategies to Escape Credit Card Debt By Lucy Lazarony
Admit it, you are over 50 with credit card debt.
According to credit card date from Experian, you're not alone. GenXers and baby boomers have several thousand dollars of credit card debt weighing them down. The average credit card balance for GenXers has grown by close to 50% since 2012 and now exceeds $9,000. Baby boomers are doing a bit better; they now owe slightly less than they did 12 years ago with a $6,648 average balance. The average interest rate on credit-card debt is 22.8% — almost double the average of 12.9% a decade ago and the highest level seen since the Federal Reserve began keeping records on this in 1994. Someone with a $9,000 credit card balance at that average interest rate will pay $170 a month in interest alone. "Baby boomers, who may be nearing or in retirement, benefit greatly from reducing credit card debt as they approach their retirement years," says Rod Griffin, senior director of consumer education and advocacy for Experian. "Lowering debt can reduce financial stress and ensure that a greater portion of their income is available for retirement savings and living expenses, rather than interest payments."
Need more incentive? Those hefty credit card balances are hurting your credit score as well as your wallet. "Credit card debt impacts your credit utilization rate, which can have a significant effect on your credit score," Griffin says. "On the flip side, keeping your credit card balances low reduces your credit utilization rate, which will have a positive impact on credit scores."
Here’s a Tip
Pay more than the minimum . You'll clear out debt faster when you pay more than the minimum payment due on your credit card balance. "The goal is to find room to increase your monthly payments, so you are paying more than the minimum,” says debt expert Bruce McClary. “The more you pay above the monthly minimum, the faster you are out of debt and the more you save on interest over time."
"Lowering debt can reduce financial stress and ensure that a greater portion of their income is available for retirement savings and living expenses, rather than interest payments."
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