Here’s why consumer credit card debt remains high + how to control it

young woman talking on a mobile phone and holding a credit card
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You might be able to look at your bank statements for confirmation, but if you didn’t already know, credit cards are having a moment. Consumers are swiping (and inserting the chip) at a torrid pace and credit card companies are benefiting big-time.

he Federal Reserve Is expected to report Monday that debt from consumer credit rose by $16 billion in March, according to USA Today. While some of that can be attributed to strong credit card use, other borrowing, such as auto and student loans, make up a large part as well.

At the end of 2017, Americans owed more than $1 trillion in credit card debt, surpassing the previous high set during the Great Recession of 2008. Economists weren’t too concerned then as the active holiday season signaled a robust economy. But with delinquencies continuing to rise, especially for those who make less money, economy watchers are taking a closer look, USA Today reports.

recent study from WalletHub shows that Q4 2017 saw “the highest quarterly accumulation of credit card debt in the last 30 years ‘ 68% higher than the post-Great Recession average.

Why credit card debt continues to edge upward

Confidence in the economy continues to scale upward even as wages have not followed accordingly. The result is that many people may be lulled into a false sense of security, justifying their urge to splurge and over-extend themselves. If you have been trying to pay off your balances, it’s probably about to get a lot tougher.

The WalletHub study indicates that borrowing spiked during the Christmas holidays. Because of that, 2017 ended with Americans being $92.2 billion in new credit card debt. That’s a 10-year high and 105% above the post-recession average, according to WalletHub.

How did we get here? At the end of 2016 and beginning of 2017, credit card companies scanned the economic landscape — new U.S. president, stable consumer confidence, new year — and made a concerted effort to increase the borrowing power of Americans.

You know that popular Oprah gif (You get a car! You get a car! You get a car!)? That’s what basically happened for U.S. consumers.

report from Transunion said that first quarter 2017 figures showed that “over 171 million consumers had access to a bankcard, the highest level TransUnion has observed since 2005.” The credit-reporting agency said that of these, 16.33 million were subprime consumers.

Translation: For many of those approved to borrow, it didn’t really matter what shape their credit was in. TransUnion said the catch is that while more people got credit, they have lower spending limits, a small-print caveat that makes people think they can handle their debt.

Money expert Clark Howard says the key to paying off credit card debt is to make it a priority. “I usually find setting a goal of paying down debt in 36 months or less works best for people,” he writes. “If the end goal is any further out than that, people tend to lose their focus.”

The  Clark Howard guide to paying off credit card debt

“Once you decide to make your debt a priority, you need to start paying more than the minimum monthly payments. That will allow you to eliminate the debt faster, save money on interest — and most importantly, stay motivated to get the job done and behind you!” Clark says.

Credit card debt can eat you alive, if you let it. The card issuers have a vested interest in getting you to spend more and more, but it doesn’t have to be this way.

3 Clark-approved ways to tackle credit card debt

  •  ”˜Skip a payment’? No thanks: Many banks and stores will send you a promotion that lets you “skip a payment.” Don’t fall for it. It’s just an easy way for your outstanding balance to accumulate additional interest, which adds to your debt.
  • Pay up every 14 days: If you can, try to pay something on your credit card bill every 14 days. If you can sync these payments to your bill due-date cycle, you can shrink your balance much quicker.
  • Don’t close that card: Resist the temptation to close the credit card once you’ve paid it down. The three major credit-reporting agencies put a lot of credence into consumers who are able to responsibly hold onto their credit cards without going into debt. Basically, it can increase your credit score if you have credit cards with zero balance.

RELATED: Here are 3 OTHER ways to tackle your credit card debt

RELATED: Stay motivated. Join our ‘Ditch Your Debt’ Facebook group

6 rules to stay debt free

Craig Johnson is a conscious money-saver who still reads paperback books and listens to vinyl. He likes to write about how technology is making things easier and more affordable — but also sometimes more dangerous — for the modern consumer. You can reach Craig at [email protected]
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