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Americans Paid Back $82 Billion in Credit Card Debt Over the Summer

Credit Card debt
America is proving that anyone can get out of debt with the right tools and guidance. Chaiphorn/stock.adobe.com

The Federal Reserve Bank of New York released a report stating that $82 billion was pumped back into the economy in the second quarter of 2020, as Americans are diligently paying off their credit card debts.

We are seldom using plastic money for restaurants or flight tickets anymore. A report from Bank of America mentions that weekly spending including credit cards in big restaurant chains has plunged by 40%. This is a good sign that Americans are reducing their credit card debt with the help of tech and certified advisors.

For most of us, credit cards in some way give us a false sense of power. We think of it as our money, and often max out in a blur. Credit cards are easy to fall for, and before you know it, you get stuck in the vicious cycle of repayment for years. Monthly minimum payments might keep you out of financial trouble, but in no way helps with saving money or fulfilling your financial aspirations.

If you think minimum payments will help you out of debt, maybe it can, but at high-interest rates, it will take you a decade! Let's take an example:

For instance, if you have $6,000 due on a credit card with 17% APR, it can take you 20 years to clear the debt with monthly minimum payments. That is like paying almost $8,000 for interest! Well, that might feel like forever, and it is meaningless to carry a $6,000 debt for so long while paying way more than you owe.

Also, a survey conducted by The Harris Poll found that 22% of millennials paid off their credit card dues with the stimulus checks. Given that millennials have over $4,000 in credit card debt on average, this is a smart move. The stimulus checks helped millions stay afloat in this pandemic, but the lapse of $600 weekly boost could mean that people might be compelled to use their credit cards soon. CreditCards.com conducted a survey and found that 62% of respondents will miss out on minimum payments if they don't return to work!

When you look at it differently, the whole point of this pandemic is to get out of the comfort zone and make necessary changes. Don't get too comfortable with the minimum payments you are making, they'll get you nowhere in the coming years.

Time to Embrace the Change

Credit Card debt
Get rid of everything plastic in your life. Ole_CNX/stock.adobe.com

Changing the way we fight debt is the way ahead. People are recognizing this fact and discovering smart ways to reduce credit card dues. Many are heavily relying on advanced tech and assistance programs from card issuers for saving money on interest as well as paying off their debt quicker. Honestly, artificial intelligence today is powerful enough to show you the fastest way towards a debt-free future while saving money on high interests.

Again, financial unawareness is the root cause of Americans getting into credit card debt for years. Not many know that missing a deadline can cost you $30 of late fees, which is completely meaningless. If you delay more than a month, your credit rep takes a hit, which can cause a whole new set of problems. Being aware of the countless ways you can save money, create wealth, and get out of debt is the key to almost every financial problem we come across.

No matter what your current situation is, you can avail of free and proprietary tools to track, manage, and easily clear your debt. There's no way around debt, technology can only expedite your repayments, save you money but cannot help you skip it. If you want a vivid picture of where you stand with your credit card debt, a good start would be Tally, an emerging fintech firm that strives to democratize the finance industry.

This free app can manage your debt using AI, create the fastest route to that debt-free day, and even offer a line of credit at APRs for saving tons of money on interest. The low-interest line of credit starts at just 7.9% APR but requires you to have a minimum FICO score of 660.

Tally will declutter your credit card problems, prioritize cards based on APR and balances to guide you in making smart payments, and make sure that you never miss another deadline. Link your credit card through a secure medium, and you are good to go.

If you are using the line of credit, make a single payment to Tally at a low-interest rate instead of multiple payments to different card issuers, and save money on interest. They literally won't let you miss deadlines. If you are unable to pay for a month, Tally will do so under the Late Fees Protection Program.

We hit rock bottom, and it does make sense to say that if you don't sort your finances now, then maybe you never will. This short window might be a very rare opportunity for many to get rid of everything plastic in their lives.

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