Credello: Americans Are Carrying $988 Billion in Credit Card Debt, the Highest Amount Ever

NEW YORK, June 13, 2023 (Newswire.com) - Credello: The burden of credit card debt has reached an all-time high in the U.S., with Americans collectively owing a staggering $988 billion. As reported by CNET, this alarming figure highlights the pressing need for individuals to understand how credit card usage impacts their credit score and the consequences of missed payments. In this article, we will explore the significance of credit cards on credit scores and provide insights on managing credit card debt responsibly.

Credit Cards and Your Credit Score

Your credit score is a crucial factor determining your financial health and ability to secure loans or favorable interest rates. Credit card usage plays a significant role in shaping your credit score, making understanding how these cards impact your financial standing essential.

The credit utilization ratio, which accounts for 30% of your credit score, refers to the percentage of your available credit that you are currently using. A high credit card balance relative to your credit limit can negatively impact your credit score. To maintain a healthy credit utilization ratio, keeping your credit card balances low and making timely payments is advisable.

Missed Credit Card Payments and Their Consequences

If you've missed a credit card payment, there can be severe repercussions on your credit score and overall financial well-being. Late payments result in late fees and penalty interest rates, and they also get reported to credit bureaus, impacting your credit history.

A single missed payment can lead to a significant drop in your credit score. Additionally, late payments can stay on your credit report for up to seven years, making it harder to obtain credit in the future. Lenders perceive individuals with a history of missed payments as higher risk borrowers, which may result in loan denials or higher interest rates.

Strategies for Managing Credit Card Debt

Given America's rising credit card debt, it is crucial to adopt effective strategies for managing and reducing debt. Here are some tips to help you regain control of your finances:

• Budgeting: Start by creating a comprehensive budget that accounts for all your income and expenses. This will give you a clear understanding of where your money is going and help you identify areas where you can cut back.
• Paying More Than the Minimum: Pay more than the minimum payment on your credit cards whenever possible. Doing so can reduce your outstanding balance faster and minimize interest charges.
• Prioritizing High-Interest Debt: If you have multiple credit cards, focus on paying off those with the highest interest rates first. By tackling high-interest debt aggressively, you can save money in the long run.
• Consolidation: Consider consolidating your credit card debt into a single loan or transferring balances to a card with a lower interest rate. This can make it easier to manage your debt and potentially reduce interest charges.
• Seeking Professional Help: If you are overwhelmed by credit card debt, don't hesitate to seek assistance from credit counseling agencies or financial advisors. They can provide guidance on debt management and help you develop a personalized plan to get back on track.

Bottom line

The record-breaking $988 billion in credit card debt carried by Americans serves as a wake-up call to evaluate our financial habits and take necessary steps to regain control. Understanding how credit cards impact your credit score and the consequences of missed payments is essential in maintaining a healthy financial standing. 

About Credello

Credello is a financial tech company offering a personal finance tool that simplifies financial decisions through personalized, on-demand recommendations — so users can borrow, save, or invest with confidence. Credello believes that finding the right financial product should be as easy and interactive as online shopping, and we are on a mission to make that possible. For more information, please visit https://www.credello.com. 

Source: Credello