America's Drunk on Credit

Listen up, America: You're drunk on credit, and you need help. Now.

According to the latest figures from the Federal Reserve, consumer credit, otherwise known as non-mortgage loans to individuals, rose in June by $10.3 billion to $2.19 trillion. Revolving debt, like credit cards, accounted for $6.65 billion, or roughly 65%, of the increase.

This is wonderful news for those in the credit business. Consider American Express (NYSE: AXP), which recently reported a 14% gain in revenue from card usage. It also issued more than 2 million new cards through partners Citigroup (NYSE: C) and Bank of America (NYSE: BAC), which also sport thriving credit card businesses.

But none of that is good for consumers -- and I mean you. You carry a special burden. Like me, you probably owe far more than the American average of $6,250 in debt. And you're paying big interest on what you owe, most likely more than the 13.14% average for credit cards that the Fed reported in May.

What you need is action. Reducing debt will improve your buying power and your margin of safety should an emergency occur. Here are three easy ways to get started:

• Rank your debts by highest obligation. You'll want to spend any excess moola paying off the debt that charges you the most interest.
  
  
• Call about better rates. Credit issuers hate losing regular payers. They'll often cut your rate to keep you on the leash. Humor these bloodsuckers till your balance is zero, and then drop them like a bad habit.
  
  
• Research balance-transfer deals. Some creditors are intractable; get rid of them with a good balance-transfer deal. You can find several excellent options at Cardratings.com.

Just these three steps will put you on the path to financial freedom. And there's much more you can do, too. For other tips on keeping more of what you have, consider Motley Fool GreenLight. Our new money-management service has everything you to need to help you live richly -- from how to make your credit profile look beautiful, to the best banks for your bucks, to how to dress up your fund portfolio for a luxurious retirement. Learn more today!

Fool contributor Tim Beyers may be back in debt, but he's already making progress toward complete financial freedom. He didn't own shares in any of the companies mentioned in this story at the time of publication. Get a peek at everything Tim is invested in at his Fool profile. Bank of America is an Income Investor pick. The Motley Fool has an ironclad disclosure policy.