FT LAUDERDALE, Fla-As a result of a slowdown in job growth and a decline in consumer confidence, credit card debt reached its highest point since November 2007.
With more consumers turning to credit cards for purchases, revolving debt rose by $8 billion, increasing the total credit card debt to $870 billion, according to the Federal Reserve.
Faced with layoffs and high prices, consumers may rely on credit cards to cover basic expenses. But while the economy is slow, consumers need to make an effort to avoid excessive credit card spending.
According to the Federal Reserve, consumer borrowing rose by $17.1 billion in May, landing at $2.57 trillion. Borrowing increased significantly due to record levels of student and auto loans, which reached $1.7 trillion.
Consolidated Credit offers tips for paying off credit card debt:
•Pay more than monthly minimum: Try to pay more the than just the minimum amount due. Any amount paid over the minimum goes directly towards the balance owed. This allows debt to be paid off faster reducing overall interest.
•Set priorities: Making a list of priorities helps consumers to focus on saving money for important goals. Consider whether a summer trip would jeopardize the purchase of a house.
•Avoid accumulating debt: Now is not the time to apply for new credit cards or loans. Focus on paying off current debt. It”s difficult to get out of debt when new debt is mounting. Use cash for purchases rather than credit.
•Pay off high interest rate debt first: The most efficient way to reduce debt is by paying down the highest interest rate balances first. Once high-interest debt is paid down, tackle the next highest, and so on. Continue paying the minimum due on all other debts.