U.S. Credit Card Balances Just Reached $917 Billion. Do These Things if You Have Too Much Credit Card Debt

If you owe a balance on one or more credit cards, you're in good company. During the first quarter of 2023, U.S. credit card balances reached an astounding $917 billion, according to TransUnion. That's a 19.2% increase from a year prior, when total U.S. credit card balances sat at $769 billion.

Of course, the problem with carrying a credit card balance is that the longer you do, the more interest you stand to accumulate. And losing all of that money to interest could stop you from meeting other financial goals, whether it's buying a home or being able to save for retirement.

Plus, carrying a higher credit card balance could cause damage to your credit score, making it harder to borrow money when you need to. And to be clear, you can make your minimum credit card payment on time every month and still end up having your credit score take a hit if your balances are such that you're using a large percentage of your total credit limit at once.

That's why it's not only important to try to whittle down your credit card debt as soon as possible, but also to consider whether credit cards are a tool you should use in the future.

Is it time to rethink your spending?

If you owe a large amount of money on your credit cards, then you may have to accept the fact that the only way you're really going to get out of debt is to make serious spending changes. This may not be necessary if you owe, say, $600. But if you owe $6,000, and you generally don't have any money left over at the end of the month after paying your bills, then consider it a wake-up call to make some serious cuts.

That could mean selling your car and dealing with public transportation to unload your auto loan payments and car insurance premiums. It could also mean moving to a smaller apartment or getting a roommate. And if you're spending money every month on things like streaming services and social events but have a massive pile of credit card debt in your name, well, those things might have to go, too -- at least until your balance is largely whittled away.

Should you stop using credit cards altogether?

If this isn't the first time you've landed in credit card debt, and you have a hard time limiting your spending, then you may be better off tucking those credit cards away for the time being and paying for purchases in cash instead. In doing so, you will give up perks like cash back and reward points. But in exchange, you might avoid adding to your pile of debt and making your financial situation worse.

This doesn't mean you should rush to cancel your cards, though. Doing so could damage your credit score. Instead, try to cut your spending so you can pay off your balances, and from there, reevaluate.

All told, it's not surprising to see that U.S. credit card balances climbed this past year. Inflation has driven living costs up, forcing many people to rely on credit cards more heavily. But you should still do whatever you can to eliminate your balance, or at least lower it, as soon as you can.