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Total U.S. credit card debt hit a record $870 billion at the end of last year, according to a recent report from the Federal Reserve Bank of New York.
The last time Americans held close to this much credit card debt, songs like T.I.’s “Whatever You Like” and Rihanna’s “Don’t Stop the Music” dominated the charts, the first “Twilight” movie was a blockbuster and Barack Obama had just been elected to his first term as president. It was the end of 2008 — the middle of the last recession.
Source: Federal Reserve Bank of New York
Not only do Americans now have more credit card debt than at any time in the past decade, the New York Fed’s report also shows an increasing number of credit card accounts that are at least 90 days behind on payments.
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At the end of 2018, Americans’ total debt rose to $13.54 trillion, the highest level since the summer of 2008, according to the New York Fed’s report. By far, mortgages were the biggest chunk of this debt, at $9.12 trillion, followed by student loans at $1.46 trillion, and auto loans, at $1.27 trillion.
While credit cards are a relatively small portion of total overall debt, they are a particular concern for older Americans, with data showing that those 60 or older hold around 30% of the nation’s total credit card debt, according to the Fed data.
Between the crippling student loan debt that millennials face and the high credit card debt burden on Baby Boomers, the Fed data clearly show that Americans are increasingly burdened by debt across all stages of life.
If the Fed’s report is inspiring you to get a better handle on your own finances, here are some tips to help you manage your credit card debt.
- Pay your credit card bills on time — and pay more than the minimum, if you can. You’ll avoid the possibility of adding late payment fees to your balances — and you’ll make more progress toward getting rid of your debt. Keeping your payment history positive and reducing your credit utilization (ratio of credit card balances to credit limits) can also help strengthen your credit profile.
- Put together a debt-repayment plan that works for you. Whether that means paying down your highest-balance debt first or your highest-interest debt, make a game plan and stick with it.
- Refresh your financial habits. Changing the way you think about money can be the key to getting — and staying — out of debt. Consider how your spending habits can help you achieve your other goals in life, and focus on addressing your needs before your “wants.” The Federal Trade Commission’s downloadable budget template can help with this.