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Credit card debt in the U.S. hits all-time high of $930 billion—here's how to tackle yours with a balance transfer

U.S. credit card debt hit a record $930 billion with younger Americans having the highest delinquency rate. Select breaks down some tips on how you can pay off credit card debt.

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Credit card debt hit a record high of $930 billion for Americans in the final quarter of 2019, according to the latest data from the Federal Reserve Bank of New York released on Feb. 11.

That's a $46 billion increase in credit card balances from the prior quarter and up an alarming $57 billion over the same period in 2018. The Fed's report sheds light on the growing debt issue in America and the increased risk facing younger consumers.

Quick facts: Credit card debt and delinquency rates

  • U.S. credit card debt hit an all-time high of $930 billion
  • Debt surpassed the $870 billion peak during the 2008 financial crisis
  • Credit card delinquency rates increased .16% from the prior quarter to 5.32%
  • Younger Americans (18 to 29) have a 76% higher delinquency rate than anyone else

Delinquency rates for credit cards — which are the portion of payments late 90 days or more — also rose to 5.32%, up from 5.16% from the prior quarter.

"The data also show that transitions into delinquency among credit card borrowers have steadily risen since 2016, notably among younger borrowers," Wilbert Van Der Klaauw, senior vice president at the New York Fed, said in the press release.

The youngest Americans (18 to 29) suffer the highest delinquency rates of 9.36%. That's 76% higher than the total average credit card delinquency rate.

Older Americans (50+) have delinquency rates below 5%, which tends to track with their increased wealth compared to younger generations.

Here's a breakdown of credit card delinquency rates by age:

  • 18 to 29: 9.36%
  • 30 to 39: 6.05%
  • 40 to 49: 5.64%
  • 50 to 59: 4.79%
  • 60 to 69: 4.34%
  • 70+: 4.26%

If you're one of the many Americans struggling to pay off credit card debt, there's no time like the present to start chipping away. Select breaks down some tips on how you can tackle debt, potentially by using a credit card to your advantage.

Use a balance transfer credit card

If you're looking to get out of credit card debt, opening a new credit card may not be your first thought.

But you can transfer debt from high-interest credit card(s) to a balance transfer credit card, that offers no interest for up to 21 months.

Completing a balance transfer can save you a significant amount on interest fees and allow all payments you make to go toward your principal balance (instead of principal, plus interest charges).

If you want to maximize no-interest periods, consider the Citi Simplicity® Card with a 0% intro APR for 21 months on balance transfers from date of first transfer (after, 19.24% - 29.99% variable APR; there is a introductory balance transfer fee of 3% or $5, whichever is greater for transfers completed within the first 4 months of account opening. After that, your fee will be 5% of each transfer (minimum $5). There's also the Wells Fargo Reflect® Card, which offers a 0% APR intro period for 21 months from account opening on purchases and qualifying balance transfers; (after, 18.24%, 24.74%, or 29.99% variable APR, see rates and fees). Balance transfers made within 120 days from account opening qualify for the intro rate, BT fee of 5%, min $5.

Take note that balance transfer cards often set maximum limits on the amount of debt you can transfer (either a percentage of your total credit limit or a set dollar amount), and you can't complete a transfer between cards issued from the same bank. Make sure you read the fine print before requesting a transfer. Good or excellent credit are often required to qualify for a balance transfer credit card.

Before completing a balance transfer, make sure you have a repayment plan in place so you pay off debt prior to the intro 0% APR period ending. Otherwise, you'll wind up paying interest again on lingering balances.

Consolidate debt with a personal loan

If you have a large amount of debt, consolidating it with a personal loan can be a good alternative to balance transfers that may not cover your total balance. And depending on your credit score, you may qualify for a loan amount that will cover your entire balance.

A personal loan provides you with a fixed amount of money over a fixed time period and at a fixed interest rate. While interest rates for personal loans are rarely 0%, they're often lower than keeping a balance on your current credit card(s).

Borrow money from family or friends

If you have less-than-stellar credit (scores below 580), you may run into trouble qualifying for a balance transfer credit card or personal loan. And if you're hesitant to open a new financial product to pay off an existing one, an alternative is asking a family member or close friend for a loan.

This option may make sense if your debt isn't too high and you have willing family or friends. Just make sure you set up a repayment plan before borrowing any money and stick to it so you don't risk damaging your relationship.

Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.
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