Credit card debt is often seen as a problem that affects young people. But in reality, it’s not people in their 20s who have the most credit card debt, nor are people in their 30s. On the contrary, 40-year-olds get this distinction, according to recent data from Personal Capital.
The average credit card balance for people in their 40s is $9,379. And while you’d think younger borrowers should owe more on their credit cards, the average balances for 20- and 30-year-olds are $3,511 and $6,568, respectively.
Why do 40-somethings have so much credit card debt?
There may be a reason people in their 40s owe so much on their credit cards: lifestyle drift. People in their 40s are likely to earn higher wages than younger people with less work experience. But those higher salaries could lead to increased spending — and therefore higher credit card balances.
Remember, because people in their 40s may have higher salaries than those in their 20s and 30s, they may be aware of higher spending limits on their credit cards. But that could, in turn, lead to increased spending and debt.
How to pay off credit card debt
Regardless of your age, it’s important to get rid of your credit card debt as quickly as possible. But if you’re in your 40s, it’s definitely time to take that debt seriously.
At this stage of life, it’s important to really start prioritizing retirement savings. But it’s hard to do that when you have credit card debt payments hanging over your head and you’re losing money in interest.
One option to get rid of your credit card debt more efficiently is to do a balance transfer, where you transfer your existing balances to a single credit card with a lower interest rate than you’re currently paying. You can even get a 0% introductory rate on your balance transfer. This is a good thing, because for a fixed period, you will not accrue interest on the amount you owe.
Another option is to take out a personal loan, use it to pay off your credit cards, and then pay off that loan instead. At first this may seem silly, because you are only exchanging one type of debt for another. But just like a balance transfer doesn’t make credit card debt go away, this option will also leave you with debt — just a cheaper kind. This is because personal loans generally charge less interest than credit cards.
Also, with a credit card, the interest rate on your debt can be variable. With a personal loan, it’s fixed, so you won’t have to worry about your monthly payments increasing over time.
Credit card debt is a dangerous thing at any age. It may comfort you to see that other people in their 40s have a lot of them, but the reality is that you should still do your best to eliminate yours as quickly as possible. The sooner you do this, the less money you’ll waste, and it could pave the way for you to reach your future financial goals.
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