WASHINGTON D.C. – A recent surge in credit card debt among young adults is prompting financial experts to offer guidance,as highlighted by a case study of a 20-year-old facing $5,000 in credit card balances. This mirrors a national trend; data from the Federal Reserve Bank of New York shows U.S.credit card debt rose to $1.03 trillion in the second quarter of 2023, a 4.6% increase from the previous quarter.
For individuals grappling with similar debt, a balance transfer to a card like the Citi Double Cash® Card is one potential strategy. This card currently offers a 0% introductory APR for 18 months (18.24% to 28.24% variable APR thereafter). A $5,000 balance transferred to this card would require approximately $278 monthly payments, roughly $40 less than potentially higher interest options. Crucially, the Citi Double Cash® Card offers rewards – 2% cash back (1% purchase, 1% upon payment) – without an annual fee, a benefit absent in many balance transfer cards.
The 2% cash back structure incentivizes responsible spending and repayment. Users earn rewards only after paying their balance, encouraging a habit of avoiding accumulating debt. This is especially crucial for young adults establishing their financial foundations.
Financial advisors consistently recommend treating credit cards like debit cards – only spending what you can promptly afford to repay. Pausing credit card usage while tackling existing debt is also a key step. This prevents further accumulation of balances and allows focused repayment.
Building good credit habits early is paramount.The consequences of unchecked credit card debt can be significant, making it difficult to qualify for loans (like mortgages or auto loans) or secure favorable interest rates in the future. Resources like the National Foundation for credit Counseling (NFCC) offer free or low-cost credit counseling services.
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Clever Credit: I’m 20 and Have $5K in Credit Card Debt. What Do I Do? originally appeared on usnews.com
