Credit card debt exceeds $1 trillion for the first time: how to use them without affecting your finances?
Credit card debt exceeds one trillion dollars, a record level since 2023. We tell you how you can use them and take care of your finances.
Given the economic situation the country is going through and the inflation that has not been controlled, Americans are increasingly resorting to their credit cards to cover their daily expenses, to the extent that the debt exceeded one trillion dollars for the first time.
According to a report published by the New York Federal Reserve, from April to June, credit card debt increased to more than $1.03 billion dollars.
This represented an increase of $45 billion dollars, or 4.6% over the previous quarter.
Debt reaches highest level since 2003
This increase of more than one trillion dollars represents the highest level recorded since 2003, according to the Federal Reserve.
The situation worries specialists because the average annual percentage rate (APR) reached a new record high of 20.33% last week, according to Bankrate reports.
The average American has $5,000 in credit card debt and at current APR levels would end up paying $7,723 in interest, making only the minimum payments.
How to use your credit card and take care of your finances?
That’s why we share some tips from experts to take care of your finances and your credit card management, since it is important to maintain a clean credit history.
When you use a credit card you acquire rights and obligations established by law, so it is essential that you take care of the management you give it to have healthy finances.
Taking care of the handling of your credit card
Having a credit card does not indicate that it is an extension of your income, so you should use it wisely so that you do not get into too much debt and that in the long run instead of a support it becomes a burden and a nightmare.
“When you use a credit card, you borrow money to buy something on the spot. Later, you pay that money back, usually with interest… If you pay back what you owe every month, you will pay less for the credit,” notes the Federal Trade Commission.
The most advisable is to use the credit card to acquire things that you cannot buy with cash because of their price, but it is important to be careful with the expenses so that the debt does not grow too much and the interest absorbs your income.
This behavior is taken into account by lenders and banks to grant a higher amount of credit, so it is important that you review how you are managing your money and your bills.
It is best to pay the credit as soon as possible, some credit cards offer a grace period to make the payment, if you can cover the total, but if it is impossible you should cover more than the minimum payment so that the interests do not increase.
In the latter case, you must cover the minimum amount on the established date, even if this means that the interest on the credit will increase. This situation could affect your credit history.
Another important point is to review your credit card statements, because if you detect any error, you should call the bank or the issuer of the service to clarify the matter, as this could impact your finances.