Average Credit Card Debt And How It Effects You

The average credit card debt can be shocking. Unfortunately, most Americans are over-loaded with credit-card debt.

Consider these facts:

The most (general purpose) credit cards. (cards in circulation during 2008)
1. Chase - 119.4 million
2. Citi - 92 million
3. Bank of America - 80.2 million
4. Discover - 48 million
5. American Express - 46.5 million
6. Capital One - 46.3 million
7. HSBC - 38.8 million
8. GE Money - 27.2 million
9. Target - 23.4 million
10. Wells Fargo - 17.3 million
(Original source: Nilson Report, February 2009)

That's a lot of credit cards! The truth is that the average American household with at least one credit card has nearly $10,700 in credit-card debt, according to http://CardWeb.com. The average credit card interest rate is typically in the mid teens, if not higher, with some APRs as high as 30%! Given this scary fact, you do want to be aware of how to best reduce your average credit card debt as quickly as possible.

Summary of the Best Ways to Reduce Average Credit Card Debt:

* Use debt for the right purposes such as mortgages and student loans
* Pay off higher interest credit card debt first
* Pay more than the minimums on your credit card payments
* Pay attention to what you are spending and cut back where you can
* Borrow from lenders with the best interest rates
* Build up savings as a cash reserve for unexpected expenses
* Pay off higher interest debt before paying down your mortgage
* Seek professional debt help if you need it

Tips to Lower your Average Credit Card Debt

Not all debt is bad. Believe it or not, in some circumstances, having some debt is actually a good thing because it can help you have a good credit rating. This is important for when you do need credit for things like mortgages or student loans.

Borrowing money for a mortgage or for college education is a good use of loans. Make sure you only borrow within your limits so you will be able to repay your loans. Also, shop around and find the best loan terms and interest rate. Another benefit of a mortgage loan is that often the interest is tax deductible.

Beyond home loans and student loans, most revolving debt isn't smart. Don't fall into the habit of using credit cards to pay for consumables, such as meals and vacations, if you can't afford to pay off your monthly bill quickly. It doesn't make sense to pay interest on these things, and by using a credit card for living expenses, you will accumulate more debt fast.

Always put aside some money each payfor these necessary items and pay off your bills quickly. If there's something you have been wanting to purchase that exceeds your monthly budget, save for it over a few paychecks so that you will be able to avoid putting it on a credit card.

Get control of your spending. It is too easy to get into debt and acquire thousands of dollars without even realizing what happened. Don't make this mistake or it can take a very long time to dig yourself out and pay off the credit cards due to the interest payments.

Keep track of your spending and or collect receipts. If you know how much you are spending, you can raise awareness of where your money is going. Reduce spending on unnecessary items and save the money or use it to pay down other debt faster.

Pay off highest-interest rate cards and loans first. If you really want to get out of debt faster, focus on repaying those cards and loans that have the higher interest rates. Also, pay at least the minimum payment, if not more, on your other debts. Take the cards in order and pay them off one at a time from highest interest rate to lowest and as soon as one card is paid off, start on the next one.

Don't pay only the minimum payment. When you only pay the minimum amount due on your credit cards, you will be lucky to pay off more than just the interest and it will take a very long time to pay off that bill. Plus, you will spend a lot on interest payments over the term of the loan.

Borrow from the right places. While you may be tempted to borrow money from your retirement plan or take out a home equity loan to reduce your average credit card debt, this can also be risky. You can pay high penalties and taxes on withdrawals from a retirement plan, and if you can't repay a home equity loan it is possible you could even lose your home.

Prepare for the unexpected. It is always a good idea to set aside some savings in reserve in case you have an unexpected life event or emergency. For example, a major car or home repair, or an illness can wipe out your savings fast.

Don't assume you should pay off your mortgage first. You may want to pay off other debts faster than your mortgage because it is typically a lower interest rate. Also, they often allow you to deduct at least some of the interest from your taxes. If your mortgage has a high rate, try to refinance it instead.

Get help when you are in trouble. If you find yourself with a lot more debt than you can handle, then get some professional help. There are many helpful debt management and counseling agencies that may help you consolidate your debt. They can also help you understand and better manage finances. Just do your research to select a reputable company.

These average credit card debt reduction tips are great techniques that you can start applying today, and take charge of getting out of debt fast!

As long as you have the willpower to apply these techniques, you will begin to relieve the pressure of too much debt.