By Craig Erwin, Ph.D.
At the end of 2021, 44% of 18-34 year-olds surveyed felt like they were drowning in debt. But Americans had made significant progress cutting their average credit card balance to $5668 at the end of 2021’s second quarter from $6728 at the end of 2019’s first quarter. Stimulus checks from the federal government helped drive balances down.
But credit card balances rose again in 2021 and spiked at the end of the year, probably in large part due to holiday shopping and the end of government stimulus. Unfortunately the Federal Reserve, the US central bank, now plans to raise interest rates, which will drive up credit card interest rates, making credit card debt more expensive to carry.
Be smart; pay off debt as soon as possible, because it will soon be more expensive to carry it. Accumulate assets (e.g., stocks, bonds, real estate), not debt; that’s the way to become wealthy.
Are you carrying a lot of credit card debt? How much? Are you planning to pay it off this year? Are you accumulating assets?
For more information on debt, interest rates, the Federal Reserve, and building wealth, click on the following links: