As per recent statistics, the Americans have racked up billions of dollars worth of debt over the last 50 years and among all kinds of debt, credit card debt takes a large portion of it. The problem of credit card debt with consumer spending during the financial crisis and slow growth has kept revolving debt grow like never before. According to the Federal Reserve figures, during July, 2014, the total outstanding US consumer debt was $3.45 trillion and this figure included student loans, auto loans and revolving debt but excluded mortgages. US revolving debt, which is primarily made up of delinquent credit card payments was around $881 billion during the same time of the year.

Credit card debt and students – What kind of relation do they share?

Unlike the previous practices of credit card companies enticing students to take on more and more credit cards and landing up in debt, now the Credit CARD Act has put brakes on the way in which students use credit cards. Among many different provisions of the Act, it also bans any kind of credit card approvals for any student who has not yet crossed 21 years of age unless they have a co-signer who is adult enough to prove that he has sufficient income to pay the bills in the event of default. Studies by Sallie Mae have shown that more than twice as many college students in 2014 have used debit cards as credit cards in order to avoid racking up debt. But unfortunately, they still incurred debt and the average balance among college students was $499, while the median was $138.

Small business credit card debt isn’t lagging behind

According to a survey by the National Small Business Association in 2013, almost half of the small businesses are transactors. As per the findings of the survey:

  • 50% of the small business owners reported that they pay off their balance on the business credit cards almost every month
  • 27% of them said that they owed a balance of less than $10,000
  • 15% said that they carried a balance of $10,000 to $25,000 and
  • 10% said that they carried more than $50,000

So, it is pretty clear that the small business owners are also carrying alarming amounts on their business credit cards, although some among them are trying their best to repay them on time. While some are getting help of debt consolidation services, some others are seeking help of the professionals.

Some practical solutions to paying off consumer debt

Initially, you may need to build up an emergency fund as without this it is tough to plan for the near future. If you’re someone who still doesn’t have an emergency fund, you should immediately take steps to create one. Here are some vital options that you may consider to pay off your consumer credit card debt.

  1. Repay the most costly debt at first: What is the interest rate that you’re paying on your Visa or MasterCard? Well, it must be somewhere around 15%, but if you’re carrying retail cards like from Target or Macy’s, this rate can reach above the high 20s. So, in case you own such retail cards that carry outrageously high rates of interest, which is much more than the interest that you earn on your savings account, consider paying off these expensive accounts first. This will save you money.
  2. Pay off cards that approach credit limit: Not many of the credit card users are aware of the fact that all your credit card companies have access to all your other cards. So, if one of your cards is approaching its credit limit and you’re running the risk of facing an interest rate hike, the other cards might notice this habit of yours and they may also do the same with you. So, repay the cards that are approaching their credit limit.
  3. Transfer your high interest balance: For all those who can take out a credit card at a nominal rate (may be 0%), they can transfer their balance to the new card. However, the nominal rate that you get will last for a specific period of time and the trick is to transfer the entire balance within the introductory period to avail the benefits of low payments.
  4. Pay off unsecured debt with secured loan: This should be your last resort but if you’re cash-poor but home-rich, you can take out a secured loan and use the proceeds to repay your credit card obligations. However, don’t default while paying off the home loan as that might trash your credit score.

Hence, if you still dream to live a debt free 2015, take into account the above mentioned tips and facts on credit card debt. Get help from a professional for more information.