Credit card debt in the U.S. hits all-time high of $930 billion—here’s how you can tackle yours with a balance transfer

Credit card debt hit a record high of $930 billion for Americans in the final quarter of 2019, according to the latest data from the Federal Reserve Bank of New York released on Feb. 11.

That’s a $46 billion increase in credit card balances from the prior quarter and up an alarming $57 billion over the same period in 2018. The Fed’s report sheds light on the growing debt issue in America and the increased risk facing younger consumers.

Quick facts: Credit card debt and delinquency rates

  • U.S. credit card debt hit an all-time high of $930 billion
  • Debt surpassed the $870 billion peak during the 2008 financial crisis
  • Credit card delinquency rates increased .16% from the prior quarter to 5.32%
  • Younger Americans (18 to 29) have a 76% higher delinquency rate than anyone else

Delinquency rates for credit cards — which are the portion of payments late 90 days or more — also rose to 5.32%, up from 5.16% from the prior quarter.

“The data also show that transitions into delinquency among credit card borrowers have steadily risen since 2016, notably among younger borrowers,” Wilbert Van Der Klaauw, senior vice president at the New York Fed, said in the press release.

The youngest Americans (18 to 29) suffer the highest delinquency rates of 9.36%. That’s 76% higher than the total average credit card delinquency rate.

Older Americans (50+) have delinquency rates below 5%, which tends to track with their increased wealth compared to younger generations.

Here’s a breakdown of credit card delinquency rates by age:

  • 18 to 29: 9.36%
  • 30 to 39: 6.05%
  • 40 to 49: 5.64%
  • 50 to 59: 4.79%
  • 60 to 69: 4.34%
  • 70+: 4.26%

If you’re one of the many Americans struggling to pay off credit card debt, there’s no time like the present to start chipping away. CNBC Select breaks down some tips on how you can tackle debt, potentially by using a credit card to your advantage.

Use a balance transfer credit card

If you’re looking to get out of credit card debt, opening a new credit card may not be your first thought.

But you can transfer debt from high-interest credit card(s) to a balance transfer credit card, that offers no interest for up to 21 months.

Completing a balance transfer can save you a significant amount on interest fees and allow all payments you make to go toward your principal balance (instead of principal, plus interest charges).

If you want to maximize no-interest periods, consider the Citi Simplicity® Card with a 0% APR for the first 21 months on balance transfers (then 16.24% to 26.24% variable APR) or the Discover it® Balance Transfer with a 0% APR for the first 18 months on balance transfers (then 13.49% to 24.49% variable APR).

If you want to minimize fees, consider a no-fee balance transfer credit card, like the Amex EveryDay® Credit Card, with a 0% APR for the first 15 months on balance transfers (then 14.49% to 25.49% variable APR). (See rates and fees.)

Take note that balance transfer cards often set maximum limits on the amount of debt you can transfer (either a percentage of your total credit limit or a set dollar amount), and you can’t complete a transfer between cards issued from the same bank. Make sure you read the fine print before requesting a transfer. Good or excellent credit (scores 670 and greater) are often required to qualify for a balance transfer credit card.

Before completing a balance transfer, make sure you have a repayment plan in place so you pay off debt prior to the intro 0% APR period ending. Otherwise, you’ll wind up paying interest again on lingering balances.

Consolidate debt with a personal loan

If you have a large amount of debt, consolidating it with a personal loan can be a good alternative to balance transfers that may not cover your total balance. And depending on your credit score, you may qualify for a loan amount that will cover your entire balance.

A personal loan provides you with a fixed amount of money over a fixed time period and at a fixed interest rate. While interest rates for personal loans are rarely 0%, they’re often lower than keeping a balance on your current credit card(s).

Borrow money from family or friends

If you have less-than-stellar credit (scores below 580), you may run into trouble qualifying for a balance transfer credit card or personal loan. And if you’re hesitant to open a new financial product to pay off an existing one, an alternative is asking a family member or close friend for a loan.

This option may make sense if your debt isn’t too high and you have willing family or friends. Just make sure you set up a repayment plan before borrowing any money and stick to it so you don’t risk damaging your relationship.

Information about the Amex EveryDay® Credit Card has been collected independently by CNBC and has not been reviewed or provided by the issuer of the card prior to publication.

For rates and fees of the Amex EveryDay® Credit Card, click here.

Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the CNBC Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.

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