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3 big credit card debt mistakes to avoid this fall
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Credit card debt is a growing issue nationwide with the total amount now sitting at $1.14 trillion, the highest level on record. This surge in card debt is paired with a concerning trend: an increase in the number of people falling behind on their payments. About 9% of credit card payments are now seriously delinquent and about 20% of credit card users are maxed out.
Part of the issue is that lingering inflationary pressures, still-high borrowing rates and a weakening job market have made it hard for many to manage both their everyday expenses and their credit card debt payments. In addition, some cardholders have been forced to use credit cards to help cover essentials like groceries, rent and gas. While that can bridge the gap between your income and expenses, the average credit card rate is near 23%, so the interest charges can compound quickly.
As these challenges mount, it’s important to ensure that you’re tackling your card debt in the most efficient manner possible — while also avoiding a few big mistakes this fall. By steering clear of the below issues, you’ll be better prepared to prevent your debt from spiraling out of control.
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3 big credit card debt mistakes to avoid this fall
Make sure to avoid these three big credit card debt mistakes this fall.
Assuming that credit card rates will drop (and make your debt cheaper)
With the Federal Reserve expected to cut rates by 25 basis points in September, you may be under the assumption that your credit card rates will decrease in tandem, making your debt easier to manage. However, this assumption could lead to a dangerous mistake.
While a rate cut might lower interest rates on other types of loans, credit card rates are less likely to respond quickly to Fed rate changes, if at all. That’s because credit card interest rates are tied to various factors, including the prime rate and the card issuer’s internal risk calculations. So, even with the Fed rate cuts, credit card rates are unlikely to drop significantly in the near term.
Given that credit card APRs are currently sitting at a record high, waiting for rates to drop could be a costly decision. You may want to take proactive steps to get rid of your debt instead. Strategies like paying more than the minimum or consolidating your debt can help you reduce the amount of interest you’re paying each month. Delaying your efforts in the hopes of cheaper borrowing costs, though, may only lead to higher overall balances.
Explore the best credit card debt relief options available now.
Letting the interest charges continue to compound
At today’s high rates, credit card interest charges can quickly turn what was a manageable balance into an unmanageable financial burden. If you’re carrying debt from month to month, the interest charges will compound, increasing the total you owe. For instance, a $5,000 balance with a 23% APR that isn’t paid off quickly can balloon in a matter of months. And the longer you allow interest to accumulate, the harder it becomes to escape the debt cycle.
To avoid letting interest pile up, you may want to explore options for minimizing or eliminating interest charges completely. One option is transferring your balance to a card with a 0% introductory APR offer, which allows you to pay down the principal balance without accruing more interest for a set period. Another strategy is to consolidate your credit card debt with a lower-interest loan. Failing to address compounding interest, though, will only make your financial burden grow heavier.
Not taking advantage of the help available to you
Many people mistakenly believe that seeking help with their credit card debt will harm their credit or make their financial situation worse. In reality, there are debt relief options that can provide significant help without major repercussions for your finances. Debt relief companies offer a range of services, including debt consolidation, debt management plans and even negotiation with your creditors to reduce your outstanding balance or interest rate. These services can make it much easier to manage your debt.
Ignoring these resources out of fear or misinformation can be a costly mistake, though. For example, enrolling in a debt management program can help you create a structured repayment plan and may even lower your interest rates or card fees, all while protecting your credit score. Similarly, negotiating with your credit card issuer can result in paying less than you owe (whether through a lump-sum settlement or other concessions), which can be helpful if you’re struggling due to a temporary financial setback. So rather than avoiding professional help, it’s important to explore all the options available to you.
The bottom line
Credit card debt is a growing issue in the current economic climate, but by avoiding these common mistakes, you can start taking control of your finances this fall. Instead of waiting for rates to drop or allowing interest to snowball, taking proactive steps now can help you reduce your debt burden before it grows. And remember, there are resources out there to help you, no matter how overwhelming your situation may seem.
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These days, you’ll find Peggy Noonan in many places: in front of commencement crowds, at political round tables, and for the past quarter-century, in the opinion section of the Wall Street Journal. But when she was just starting out in Washington, D.C., you could find Noonan at the Off the Record Bar, near her job at the White House. “I would sit over there by myself, I would order a beer or a glass of wine, and I’d just quietly sit and read,” she said.
In 1984, Noonan joined President Ronald Reagan’s staff, after working at CBS in New York. At first, she felt like an outsider in the buttoned-up West Wing, but soon became an acclaimed speechwriter. Early on, she wrote Reagan’s moving speech for D-Day’s 40th anniversary.
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Then, when the Challenger shuttle tragically exploded, Noonan was given a tough assignment: write Reagan’s address to a distraught nation. “I had a feeling of, that didn’t work, nothing worked, because nothing was worthy of that moment; nothing was worthy of that day,” she said. “But then Frank Sinatra called – he called that night to the White House to say, ‘Mr. President, you just said what needed to be said.’ And Frank didn’t call after every speech!”
By the late eighties, Noonan had cemented a reputation as a wordsmith, and Reagan turned to her for his farewell address:
“We made the city stronger, we made the city freer. All in all, not bad, not bad at all.”
George H.W. Bush turned to Noonan, too, as he rallied Republicans on his way to the White House. “You know, part of life is luck,” she said. “It was not lucky to follow dazzling Ronald Reagan and be plainer, seeming sturdy George H.W. Bush. But I believe history was not – certainly in his time – sufficiently fair to him.”
That opinion is one of many found in the pages of her new book, “A Certain Idea of America,” a collection of her recent work (to be published Tuesday by Portfolio).
Portfolio
Asked what her idea of America is today, Noonan replied, “Big, raucous, troubled, frayed.”
Noonan’s columns often delve into questions of character and leadership. “What I do not perceive now is many politicians who are actually saying, Guys, this is not good for the country. We’ve been given this beautiful thing called America. Shine it up! Keep it going!”
Costa said, “You have a lot of fun in this book, doing what you call taking the stick to certain people from time to time.”
“I don’t mind the stick at all,” said Noonan. “When I see something that I think is just awful, I love to get mad at it. I got mad at John Fetterman.”
“You don’t like that he’s wearing shorts?”
“It’s okay with me that he wears shorts,” she replied, “but he is not allowed to change the rules of the U.S. Senate to accommodate him in his little shorts and hoodie because he enjoys dressing like a child.”
Noonan, now 74, grew up in the Democratic strongholds of New York and New Jersey. “And I was very happy with that, because Democrats were cooler than Republicans,” she said. “Democrats were little Bobby Kennedy, and Republicans were, like, Dick Thornburgh!”
But in Reagan, she saw something fresh. “You looked at him, you saw his confidence, and it made you feel optimistic,” she said.
The Gipper, of course, no longer dominates the Republican Party, and President-elect Trump’s victory could transform the GOP even more in the coming years. “In terms of policy, the Republican Party has changed by becoming, not a standard, usual conservative party, but a populist party,” Noonan said. “Its issues have changed very much. But also, the edge of anger and resentment and, I’m afraid, a little paranoia that is in the Republican Party now would be something that Reagan did not recognize.”
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At the Off the Record Bar, the faces on the wall – caricatures of politicians of the past – and at the tables still catch her eye. For Noonan, it’s all part of the story – America’s, and her own.
Costa said, “In a way, you’re still the writer in the corner watching everybody at the bar in Washington.”
“Yeah, I like to watch them, she said. “They’re human, and you bring a little warmth to it, a little humor, and always bring your stick and smack them when you need to! It’s kind of nice.”
READ AN EXCERPT: “A Certain Idea of America” by Peggy Noonan
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Story produced by David Rothman. Editor: Joseph Frandino.
