KNOXVILLE, Tennessee — The Federal Reserve Bank of New York has been tracking credit card debt since 1999. Credit card debt in the U.S. is at the highest level it's been since then, with the total amount of debt in the third quarter of 2023 reaching around $1.08 trillion dollars.
"It's harder now than it has been, because interest rates are historically high just due to the economic climate that we're in right now," said Tim Young, a wealth advisor for the Tennessee Valley Asset Management Partners.
Young said it may tempting for people to spend more with credit cards during the holidays, but it isn't necessarily the best idea.
"I think a lot of people have had some fear and some concern as of late, with just things that are going on, and they run to something like buying Christmas presents to make up for that," said Young. "Which is totally understandable. I can see how, you know, especially if you've got kids that can be something that's a priority for you. But when it comes to managing your finances, I think it's important to think long-term beyond just that next shiny thing that you can get."
However, Young says there are ways families and consumers can manage debt and get it down. He says people should track their spending and save their money, especially going into the holiday season, so people don't spend beyond their means.
"Creating a budget, seeing what sort of extra things you can get rid of, you know, like streaming services. I bet so many people have excessive streaming services for shows they're not even watching anymore so cutting back on things like that and allocating some of that spending towards paying off that debt as quick as you can," said Young.
He also said people shouldn't be afraid to spend, they should just spend wisely.
"It's a lot more simple than I think people make it. Sometimes, it's living within your means," said Young. "It's living intentionally with a plan. Something that I always tried to say is, 'Dollars without direction have no duration,' meaning financial planning takes intentionality. It's living on purpose, or as we say, here at TVAMP, it's living invested. So in simple terms, if your outflow exceeds your inflow, then your upkeep is going to be your downfall. So, as you're going into this holiday season, it's important to remember that and try to live within your means while still, you know, spending enough to have a special holiday."
Young says paying the minimum payment due on credit card debt, or paying more monthly, depends on each person's situation. But, he does recommend the faster a person can pay off debt, the better. He also recommends people create a financial plan.