ROCHESTER, N.Y. (WROC) — For the first time ever, Americans now owe more than 1 trillion dollars on credit cards.
News 8 spoke with Ethan Wade, a financial advisor from Brighton Securities. He takes us through some helpful steps you can take to pay off the bills.
“The biggest piece of news recently is that credit card debt now, for the first time ever, is above $1 trillion,” Wade says.
Why is it so high? Wade says it can come down to one main reason.
“Interest rates are at some of the highest levels they’ve been in a couple of decades,” he says. “Credit cards, the average interest rate on a credit card is north of 20% per year.”
Wade says that if the minimum payment is only being made, that could be hurting people.
“That minimum payment oftentimes means maybe you’re just paying the interest that accrued over the past 30 days and you’re not even touching the principal to eventually bring that down,” Wade says.
So how can it get paid off? Here’s one way —
“The key, if you can pay off your balance every month, you won’t have to pay the interest,” Wade says. “But when you don’t pay off the balance, that interest can really start to accrue.”
He says this can be the start of a successful financial life for the younger generation who may just be getting started.
“One of the best ways to put yourself on a sound financial path is just to invest anything you can when you’re younger,” he says. “Any money that has to go towards a credit card balance or credit card interest just makes that much more of a hurdle when saving for your eventual future.”
Some other things Wade says to keep in mind before paying with a credit card — think if that purchase is a want or a need. He adds essential things like gas and groceries is smart to put on credit, but maybe not a new pair of shoes.