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Consumers of all ages have credit cards, but some generations have larger outstanding balances than others.
Gen Xers have the highest average credit card debt at $ 7,155, followed by baby boomers and millennials, according to the credit bureau Experian’s latest findings with consumers.
With an average credit card balance of $ 1,963, Gen Z consumers have the lowest credit card debt. Younger, newbie credit cardholders typically have lower credit limits than their older cohorts, so it’s not unusual for Gen Z to have the lowest credit card debt.
Here is the average credit card debt broken down by generation:
- Generation Z: $ 1,963
- Millennials: $ 4,322
- Generation X: $ 7,155
- Baby boomers: $ 6,043
- Silent generation: $ 3,177
While credit cards help pay for your daily expenses and sometimes reward you for spending, keeping a balance is expensive, no matter how old you are.
Most card issuers charge noticeably high double-digit interest rates every time you keep a balance. The average credit card APR is 15.91%, according to the The most recent data from the Federal Reserve. And because the majority of credit card issuers compound interest daily, your balance grows a little bit each day it’s not paid.
Fortunately, cardholders in debt can get help paying off their balance permanently, either through a credit card with balance transfer or a personal loan.
How Balance Transfer Credit Cards Can Help
Balance transfer cards allow you to transfer your existing credit card debt to a new card with a 0% APR introductory period. This period can range from six to 20 months, depending on the card you choose. During the introductory period, you can take the time to make payments on your credit card debt without worrying about accumulating additional and costly interest. This helps you catch up by allowing all the payments you make to go towards your principal balance (instead of principal, plus interest charges).
We’ve done the work for you, analyzing over 100 popular balance transfer cards to find the best of the best based on the spending habits of the average American. (See our methodology for more information on how we choose the best cards.)
Our first choice is the American bank VisaÂ® Platinum card, which offers 0% introductory interest for the first 20 billing cycles on balance transfers and new purchases (after, 14.49% to 24.49% variable APR). This is a long period of time during which you can reduce your credit card debt without it increasing month by month (as long as you don’t put extra charges on the card).
On the secure site of US Bank
0% for the first 20 billing cycles on balance transfers and purchases
Balance transfer fees
Either 3% of the amount of each transfer or $ 5 minimum, whichever is greater
Foreign transaction fees
Make sure you have a repayment plan in place before you complete your balance transfer, so that you know you can pay off your credit card debt before the 0% annual interest period ends. Otherwise, you will end up paying interest again on the remaining balances.
How personal loans can help you
As an alternative to a balance transfer card, a A personal loan is a great way to get a lower interest rate on your credit card debt – and you can even find loan amounts that can cover your entire credit card balance.
Personal loans differ from balance transfer cards in that they give you more time to pay off your debt and allow more debt. With balance transfer credit cards, issuers often limit the total balance (s) you can transfer to a percentage of your credit limit or to a specific dollar amount. You probably need good or great credit to qualify for a balance transfer card, but with personal loans there are some if you have bad credit.
Personal loans provide you with a lump sum of money, then you are responsible for repaying a fixed amount of money, over a fixed period of time and at a fixed interest rate, which is often lower than the rate you pay in keeping a balance on your credit card.
When looking to refinance high interest credit card debt, SoFi is an ideal lender. They offer personal loans up to $ 100,000 based on your creditworthiness, and you can choose between a variable or a fixed APR (which not all personal loans have). Signing up and applying is easy, and its app makes it easy to manage your payments, wherever you are. And if you automate your payments, you’ll get a 0.25% interest rate discount. Read our full review of SoFi personal loans to learn more.
Annual percentage rate (APR)
5.99% to 22.56% when you sign up for automatic payment
Purpose of the loan
Debt consolidation / refinancing, home renovation, moving assistance or medical expenses
To determine which credit cards offer the best balance transfer deals, Select analyzed 101 of the most popular credit cards that offer zero interest on balance transfers issued by the biggest banks, finance companies and credit unions that allow anyone to join.
We compared each card on a range of features, including: annual fee, balance transfer fee, rewards program, introductory and standard APR, welcome bonus, and overseas transaction fees, as well as factors such as credit requirements and customer reviews when available.
For the balance transfer cards, we used a Discount rate calculator to calculate the interest rates and fees you could incur if you transfer $ 5,313, the average balance that Americans carry on their credit cards in 2020, according to Experiential.
If the average consumer with a $ 5,313 credit card balance pays $ 200 each month, they’ll spend about $ 1,320 in additional interest, assuming an average APR of 16.28%, according to the fed. And it will take them 34 months – almost three years – to pay off that debt.
With many cards on this list, if you take full advantage of the APR introductory period and pay $ 200 per month, you’ll pay less than $ 400 in interest and fees. It is a significant saving.
For cards that offer a rewards program, we’ve also estimated how much cash back you could earn over a five-year period. Select has partnered with a location intelligence company Esri. The company’s data development team has provided the most recent and comprehensive data on consumer spending based on the 2019 Bureau of Labor Statistics Consumer Spending Surveys. You can learn more about their methodology here.
Esri’s data team created a sample annual budget of roughly $ 22,126 in retail spending. The budget includes six main categories: groceries ($ 5,174), gasoline ($ 2,218), restaurants ($ 3,675), travel ($ 2,244), utilities ($ 4,862) and general purchases ($ 3,953) . General purchases include items such as housekeeping supplies, clothing, personal care products, prescription drugs and vitamins, as well as other vehicle expenses.
Select used this budget to estimate how much the average consumer would save over one year, two years and five years, assuming they would try to maximize their rewards potential by earning all the welcome bonuses offered and using the card for all. applicable purchases. All total reward estimates are net of annual fees.
It is important to note that the value of a point or mile varies from card to card and depending on how you redeem them. When we calculated the estimated returns, we assumed that cardholders were redeeming points / miles for a typical maximum value of 1 cent per point or per mile. (Extreme optimizers might be able to get more value.)
When choosing the best balance transfer card, we focused on the card that gives consumers the cheapest way to pay off their debt rather than how many rewards they could potentially earn. When you’re in debt with a credit card, your primary goal should be to pay off. Earning rewards should be seen as a bonus, and you don’t want to spend beyond your means to earn points.
The five-year rewards total and estimates of interest rates and fees are derived from a budget similar to the expenses and debt of the average American. You can get a higher or lower return depending on your consumption habits.
Editorial note: Any opinions, analysis, criticism or recommendations expressed in this article are the sole responsibility of the editorial staff of Select and have not been reviewed, endorsed or otherwise approved by any third party.