Carded: Many Americans struggle with credit card debt

(InvestigateTV) — U.S. households with revolving credit card debt owe an average of just over $10,000, according to a new NerdWallet study.

With credit card interest rates still above 24%, according to Investopedia, carrying that level of debt can be extremely expensive, warns Sara Rathner, a credit card expert at NerdWallet.

She said this is a great time to get organized and find ways to lower interest rates.

“So, when it comes to paying your debt off, you can try debt repayment methods that can help keep you organized and motivated,” Rathner said. “Debt avalanche is one, for example, where you list all of your debts in order from highest interest rate to lowest interest rate. You make minimum payments on everything, but then you focus any extra money in your budget to the debt with the highest interest rate.”

Once the first debt is paid off, move on to the next, continuing the process until all debts are cleared.

The survey also found that some Americans prioritize debt repayment based on the level of stress each debt causes them.

“Let’s say you have two credit cards that each charge 25% APR, which is a high interest rate. But you also borrowed money from a relative to handle some of your other bills,” she proposed. “And the relative has been hinting that they need you pay them back and it’s causing you a lot of anxiety, maybe you prioritize paying off that relative.”

She said that while this may not be the most mathematically optimal approach, it’s interesting to see how often people prioritize debt repayment based on stress. Although this strategy could lead to higher interest costs, it may help preserve important relationships.

Rathner said the best thing to do is to pick a debt repayment strategy that helps people sleep better at night.

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