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Of course, there’s a risk in handing over sensitive data. Identity theft is on the rise — the Federal Trade Commission received more than 1.1 million reports of it in 2022 alone. And the total number of data breaches has more than tripled, according to a 2022 report from Verizon.

The good news is, there are steps you can take to help protect your personal information. Some of these you’ll only need to do once, others are a habit that you’ll get the hang of with time.

Let’s take a closer look.

1. Use Strong Passwords

One of the most basic ways to protect yourself online is to use a unique password for each of your accounts — email, social media, mobile banking, you name it. Aim for passwords that are simple for you to remember but difficult for others to guess.

To create a strong password, keep the following tips in mind:

•   Use a combination of upper- and lower-case letters, symbols, and numbers.

•   Longer is usually better — aim for a password that’s at least six characters long.

•   Never use personal information like your name, birthday, or email address.

•   Random passwords are usually difficult for hackers to crack. Use a password generator if you need help.

2. Turn On Two-Factor Authentication

Take advantage of two-factor authentication (2FA) when possible. 2FA involves using one authentication method plus your username and password. Examples of 2FA include sending a numerical code to your phone or email, using fingerprint ID, or identifying you via facial recognition.

Certain accounts add an extra layer of protection by using authenticator apps like Google Authenticator, Authy, or Microsoft Authenticator. Typically, these apps generate a verification passcode, which you’ll need to enter when you log in.

3. Always Use a Secure Connection

There were concerns in the not-so-distant past about using a public wifi network to get online, as it could make your information vulnerable to hackers. But today, connecting through a public network is usually considered safe. That’s because most websites protect data through encryption, a process that involves scrambling information so it can only be deciphered using a unique encryption key.

To make sure your connection is encrypted, look for either a lock symbol or “https” to the left of the URL in a browser.

4. Know the Signs of a Phishing Scam

Phishing is the oldest trick in the book. Unfortunately, it also happens to be fairly successful.

Phishing emails and text messages can take many different forms: a link to confirm financial information, an alert about suspicious activity or log-in attempts on one of your accounts, an invoice you don’t recognize, a coupon for a free prize.

One effective way to help prevent falling for these scams? Be cautious about emails that have an attachment or embedded link, and don’t click or download anything from a source you don’t recognize. Keep in mind that legitimate companies usually won’t send you a link to change or update your payment information. If you’re not sure whether a message is authentic, you can call the company directly to confirm.

5. Check Your Credit Report

Checking your credit report regularly is a simple way to help protect your identity and financial security. You can request a free credit report from each of the three major credit reporting agencies, Equifax, Experian, and Transunion, by visiting AnnualCreditReport.com . It will detail all the information about your financial history, including credit card debt, student loans, missed payments and more.

When you receive your credit report, make sure all of the information is accurate. If you notice anything that is incorrect, report it to the credit bureaus and dispute any inaccurate information.

6. Monitor Your Credit Card and Bank Accounts

Keeping tabs on your credit card and bank accounts doesn’t just help with tracking your spending. It’s also a good way to spot mysterious charges.

Sometimes, a scammer will start with a small, unassuming charge and then quickly escalate their spending when they feel that a person isn’t paying attention. Look for strange names and keep tabs on every purchase, no matter how small.

7. Make Social Media Profiles Private

At first glance, this might seem like an unnecessary step. After all, if someone has your social security and your address, what more do they need? But strengthening your privacy settings on your social media accounts can go a long way to protecting your data in the future. Hackers can use photos, comments, and more to learn about you, which could make it easier for them to break into your accounts.

8. Tap Into Online Tools for Help

As data security becomes more important, the government is getting involved. If you think, or know, that your identity has been stolen, you can visit Identity Theft , the Federal Trade Commission’s website dedicated to cyber security protection. There are resources to help you troubleshoot ongoing issues, create a plan to protect your identity, report identity theft, and more.

9. Update Software

Yes, updating apps, web browsers, and operating systems takes time and may temporarily disrupt your work. But the reward — protecting your data — is worth the few extra minutes. Many times, software updates include new features or improved security.

Set updates to happen automatically so you always have the latest and greatest version.

10. If Your Identity Has Been Stolen, Consider Placing a Credit Freeze on Your Files

By placing a credit freeze or security freeze on your files, you can prevent a potential hacker from opening a new account in your name. The freeze restricts access to your credit report, which makes it difficult for a cyber criminal to open up any accounts.

Freezing your credit does not affect your credit score. However, as long as the freeze is in place, you won’t be able to open any new accounts in your name. If you’re planning to rent an apartment, apply for a job, or buy insurance, you’ll likely need to temporarily lift the freeze for a certain amount of time or for a specific party.

Check with the credit reporting company in advance to find out the costs and lead times. The process is daily involved, as you’ll have to request a credit freeze with all three agencies.

Also, it’s worth mentioning that a credit freeze doesn’t prevent a hacker from adding charges to your existing accounts

11. Consider Placing a Fraud Alert on Your File If You Suspect Identity Theft

This is a much easier option than placing a full credit freeze, as it only requires creditors to confirm your identity instead of freezing all your credit in the future. It may be a good step to take if you are concerned that someone might have been able to access your personal data but lack proof

The Takeaway

Data breaches and identity theft happen, but by taking some simple precautions, you can help keep your personal information from falling into the wrong hands.

Cybercrime isn’t just disruptive, it can also be expensive. That’s why SoFi has partnered with Blink by Chubb to help protect your finances with cyber insurance. Apply in just minutes and get your quote.

Photo credit: iStock/ozgurcankaya

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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If you’re in a bind to make a credit card payment, you may wonder if you can use another card to make your minimum payment. Typically, that’s not possible, or at least you can’t make the payment directly.

There may be workarounds that allow you to pull it off indirectly, such as cash advances and balance transfers.

Here, learn the details on these options, as well as some alternatives to help out when you are short on cash and have a credit card payment due.

Avoiding the Issue in the First Place

The best way to avoid a situation in which you are considering using one credit card to pay another is by paying your entire credit card statement balance every month.

Making credit card payments in full and on time will allow you to avoid paying interest.

Paying the statement balance in full each billing cycle also reduces the chance of accumulating debt that is hard to pay off.

At the very least it is important to make minimum payments to avoid negative effects on your credit score.

Of course, many people face situations in which it becomes hard to pay bills on time. Finding a budget system that works for you is one way to manage; there are many different budgeting methods out there, and it’s like one or more will suit you.

You might also consider doing some of your spending with a debit card or cash to avoid carrying so much credit card debt.


💡 Quick Tip: Before choosing a personal loan, ask about the lender’s fees: origination, prepayment, late fees, etc. One question can save you many dollars.

Paying a Credit Card With Another Credit Card

Curious to know, “Can I use a credit card to pay off another credit card?” Most credit card rules don’t allow you to directly pay one card with another. It’s considered too expensive to process these kinds of transactions. But that said, there may be some workarounds that could allow you to use one card to pay another.

Taking a Cash Advance

You can’t pay one credit card with another directly, but you might be able to pay a credit card with a cash advance from another credit card.

Let’s say you have two credit cards: Card A and Card B. You can’t afford to make your minimum payment on Card A, so you’re looking to Card B for a little help. You have the option to take a cash advance from Card B.

You could use Card B to withdraw cash at an ATM. Then you’d deposit that money into your checking account and make an online payment from your bank account or with a debit card.

Pros of a Cash Advance

The pros of using a cash advance to pay another credit card aren’t numerous. Basically, you are just accessing cash when it’s urgently needed.

•   Taking out a cash advance may be the right option if your situation meets three criteria: You’re trying to pay a small amount on Card A, you already have a second credit card (Card B) to use for this transaction, and Card B has a lower interest rate than Card A.

•   Most credit card companies limit how much cash you can withdraw with your credit card per month. If your withdrawal limit from Card B is $5,000, though, and you want to make a payment of $500 on Card A, things shouldn’t get too sticky.

In this way, you can make a payment, whether the minimum or more, to the credit card that is due. By using this process, the answer to “Can I pay a credit card with a credit card?” can be yes.

Cons of a Cash Advance

While a cash advance may get the money you need into your hands, consider the cons:

•   Your credit card company might not allow you to withdraw enough money per month to pay off your other credit card. Your cash advance limit isn’t necessarily the same as your monthly spending limit. Before you take a cash advance, you may want to contact the company that issued your second card to inquire. Or check a statement.

•   Also, interest usually starts accruing on the amount you withdraw from the moment you take the cash advance. The annual percentage rate (APR) for a cash advance will typically be higher than the purchasing APR on the card. As a result, it’s possible to go even further into debt.

•   What’s more, you’ll likely pay a fee to take a cash advance. The amount will depend on the credit card company, but you can usually expect to pay the greater of $10 or 5% of the amount you withdraw.

Completing a Balance Transfer

If you don’t have another credit card, or your cash advance allowance is too low, you might consider a balance transfer, which would allow you to transfer the balance on Card A to Card B.

Ideally, Card B would have a lower interest rate or none at all. You could potentially pay off the total balance more quickly because more of the money you used to pay in interest is going to pay off the principal, or you’re not accruing interest at all.

You may complete a balance transfer only by using a designated balance transfer credit card.

Pros of a Balance Transfer

The benefit of a balance transfer is getting a reprieve on paying the high interest rates that credit cards can charge.

•   Certain credit card companies offer balance transfer credit cards with no interest for the first six months or more. When you shop around for a new card, you’ll typically hear the grace period referred to as an “introductory balance transfer APR period” or “promotional period.”

•   During this period, you can work on paying off your debt without paying any interest. This can help you manage your finances and debt better.

Cons of a Balance Transfer

While balance transfers may be a godsend for paying off your balance in a set amount of time, what if you can’t nibble away at the total balance quickly? Keep these drawbacks in mind:

•   Once the introductory balance transfer APR period ends, the interest rate will shoot up, and the balance transfer card may not seem so magical anymore.

•   If you miss a payment, most companies will suspend the introductory APR period on your new card, or Card B, and you’ll have to pay what’s known as a default rate, which could end up being even higher than the rate on your previous Card A. Even if you consider yourself responsible enough to make all your payments on time, a financial emergency could throw you off track.

•   There are also generally fees associated with balance transfers, though they’re often lower than cash advance fees.

•   It’s worth mentioning that you usually can’t use balance transfers or cash advances to get credit card points or miles.

💡 Quick Tip: Swap high-interest debt for a lower-interest loan, and save money on your monthly payments. Find out why SoFi credit card consolidation loans are so popular.

What If I Can’t Pay My Minimum?

Now you have some answers to why you can’t pay a credit card with a credit card directly. And you know the ways to get around that situation and still use plastic.

If, for whatever reason, a cash advance or balance transfer isn’t available to you, you may still have trouble making your minimum payments. If this is the case, stay calm, and assess your situation. Here are some options for a credit card debt elimination plan.

•   You may want to gather your credit card statements and put your debts in order, either from largest to smallest or from highest interest rate to lowest. This step can help you understand how much debt you’re in and how to prioritize your bills.

•   You may decide to tackle the largest debts first or even your smallest to gain momentum. Or you may decide to save money on interest by focusing on credit cards with the highest interest rate first. You may see these tactics referred to by such names as the debt avalanche or snowball repayment methods.

•   You may consider talking to your creditors to see if they can help. A credit hardship program could give you more time to pay off your balance or adjust your terms.

What About a Personal Loan?

Taking out a personal loan is an option for paying off a large credit card bill. A personal loan may come with a lower interest rate than a credit card, and may be more manageable in the long run.

Pros of a Personal Loan

Here are some of the pluses of using a personal loan to pay off credit card debt:

•   If you have a good credit score, your rate for a personal loan could potentially be lower than your credit card rate. If that is the case, you could take out a kind of personal loan called a credit card consolidation loan, and then make payments on the loan at the lower interest rate. You’d likely end up paying less in interest over time and might be able to pay back the loan more quickly than you’d be able to pay off the credit card.

•   Most credit cards come with variable interest rates, meaning the rate can change over time with shifts in the economy. An unsecured personal loan usually has a fixed rate. (Unsecured means the loan isn’t secured by collateral, like your home or car.) This can help you budget better, since you know what you owe every month.

•   Taking out a personal loan also could help your credit utilization ratio, the amount of available revolving credit you’re using. Credit utilization affects your credit score. You can build your credit score by lowering your credit utilization ratio. Your score can also be favorably affected when you consistently pay bills on time.

Cons of a Personal Loan

Taking out a personal loan to pay off a credit card isn’t for everyone. Here are some downsides to think over.

•   It might not help you take control of your finances. Maybe you have trouble controlling your spending, and that’s why you have credit card debt to begin with. Having a personal loan to fall back on could tempt you to spend even more with your credit card.

•   Also, a lower interest rate isn’t guaranteed. If you discover that your loan rate could be higher than your card’s rate after inquiring with a lender, taking out a loan may not be the best choice.

•   No matter how low your personal loan interest rate is, it will still be higher than the rate during an introductory APR period for a balance transfer.

The Takeaway

Can you pay a credit card with a credit card? Indirectly, yes, with a balance transfer or cash advance. While those moves can work in a pinch, each has potential drawbacks.

Taking out a fixed-rate personal loan with a clearly defined payment schedule may be the better long-term option.

Think twice before turning to high-interest credit cards. Consider a SoFi personal loan instead. SoFi offers competitive fixed rates and same-day funding. Checking your rate takes just a minute.

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Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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Debt may seem like something you want to avoid. But having some debt can actually be a good thing, provided you can comfortably afford to make your payments each month.

A good payment history shows lenders that you can be responsible with borrowed money, and it will make them feel better about lending to you when the time comes for you to make a big purchase, like a home.

But not all debt is created equal. Consumer debt can generally be broken down into two main categories: secured and unsecured. Those two categories can then be subdivided into installment and revolving debt. Each type of debt is structured differently and can affect your credit score in a different way.

Here are some helpful things to know about the different types of debt, plus how you may want to prioritize paying down various balances you may already have accumulated.

Secured vs Unsecured Debt

The first distinction between types of debt is whether it’s secured or unsecured. This indicates your level of liability in the event you fall behind on payments and go into default on the loan or credit card.

Secured Debt

Secured debt means you’ve offered some type of collateral or asset to the lender or creditor in exchange for the ability to borrow funds. There are many types of secured debt. Auto loans and mortgages are common examples.

The benefit is that you improve your odds for approval by offering collateral, and you may also receive a better interest rate compared to unsecured debt. But if you go into default on the loan, the lender is typically allowed to seize the asset that’s securing the debt and sell it to offset the loan balance.

If that happens, not only is your property repossessed, your credit score can also be severely damaged. This could make it difficult to qualify for any type of financing in the near future.

A foreclosure, for instance, generally stays on your credit report for seven years, beginning with the first mortgage payment you skipped.

Unsecured Debt

Unsecured debt comes with much less personal risk than secured debt since you don’t have to use any property or assets as collateral.

Common types of unsecured debt include credit cards, student loans, some personal loans, and medical debt. Since you don’t have to put up any type of collateral, there may be stricter requirements in order to qualify. Your lender will likely check your credit score and potentially verify your income.

With unsecured debt, you are bound by a contractual agreement to repay the funds, and if there is a default, the lender can go to court to reclaim any money owed. However, doing so comes at a great cost to the lender. For this reason, unsecured debt generally comes with a higher interest rate than secured debt, which can pile up quickly if you’re not careful.


💡 Quick Tip: We love a good spreadsheet, but not everyone feels the same. An online budget planner can give you the same insight into your budgeting and spending at a glance, without the extra effort.

Installment vs Revolving Debt

The difference between secured and unsecured debt is one way to classify financing options, but it’s not the only way.

Both secured and unsecured debt can be broken down further into two additional categories: installment debt and revolving debt.

Installment Debt

Installment debt is usually a type of loan that gives you a lump sum payment at the beginning of the agreement. You then pay it back over time, or in installments, before a certain date.

Once you’ve paid the loan off, it’s gone, and you don’t get any more funds to spend. Examples of this type of debt include a car loan, student loan, or mortgage.

There are a number of ways an installment loan can be structured. In many cases, your regular payments are made each month, with money going towards both principal and interest.

Less frequently, an installment loan could be structured to only include interest payments throughout the term, then end with a large payment due at the end. This is called a balloon payment. Balloon payments are more frequently found with interest-only mortgages. Rather than actually making that large payment at the end of the loan term, borrowers typically refinance the loan to a more traditional mortgage.

Installment loans can have either a fixed or adjustable interest rate. If your loan has a fixed rate, your payments should stay the same over your entire term, as long as you pay your bill on time.

A loan with an adjustable rate will change based on the index rate it’s attached to. Your loan terms tell you how frequently your interest rate will adjust.

Provided you make your payments on time, having a mortgage, student loan, or auto loan can often help your credit scores because it shows you’re a responsible borrower. In addition, having some installment debt can help diversify your credit portfolio, which can also help your scores.

Revolving Debt

Unlike installment debt, revolving debt is an open line of credit. It gives you an amount of available credit that you can draw on and repay continually.

Both credit cards and lines of credit are common examples of revolving credit. Instead of getting a lump sum at one time (as you would with installment debt), you only use what you need — and you only pay interest on the amount you’ve drawn.

Your available credit decreases as you borrow funds, but it’s replenished once you pay off your balance.

Revolving debt can be unsecured, as in the instance of a credit card, or it can be secured, such as on a home equity line of credit.

One downside of revolving credit is that there’s no fixed payment schedule. You typically only have to make minimum payments on your revolving credit, but your interest continues to accrue.

That can result in a much higher balance than the original purchases you made with the funds. And if you miss a payment, you’ll likely owe late fees on top of everything else.

Because it’s easier to get caught in a cycle of debt, having large revolving debt balances can hurt your credit score. A balance of both revolving and installment debt can give you a healthier credit mix, and potentially a better credit score.


💡 Quick Tip: Check your credit report at least once a year to ensure there are no errors that can damage your credit score.

Debt Payoff Strategies

Whatever kind of debt you carry, the key to avoiding a negative debt spiral — and maintaining good credit — is to pay installment debt (such as your student loan and mortgage) on time, and try to avoid carrying high balances on your revolving debt.

While everyone’s financial circumstances are different, here are some debt payoff strategies that can help you prioritize your payments.

Paying off the Highest Interest Debt First

If your primary goal is to save money over the life of your loans, you may want to start by paying off your highest interest rate loan first, while making just the minimum payments on everything else.

You can then move on to the next highest and next highest until your debts are paid off. This payoff approach is often referred to as the “avalanche” approach.

Paying off the Debt with the Smallest Balance First

Paying down debt can feel never-ending, so it can be nice to feel like you’re making progress. By focusing on your smallest debts first (and paying the minimum on everything else), you can cross individual loans off your balance sheet, while quickly eliminating monthly payments from your budget.

Once paid off, you can then reroute those payments to make extra payments on larger loans, an approach often referred to as the “snowball” method.

Considering Debt Consolidation

If you don’t see a clear strategy for paying off your debt, you might consider debt consolidation. This involves taking out a single personal loan to consolidate your other balances. If your credit score has increased, this may be a good way to decrease your overall interest rate. But at a minimum, this move can help streamline your payments.

Being Wary of Debt Settlement Companies

If you’re feeling overwhelmed by debt, you may look for a shortcut with a debt settlement company.

Debt settlement is a service typically offered by third-party companies that allows you to pay a lump sum that’s typically less than the amount you owe to resolve, or “settle,” your debt. These companies claim to reduce your debt by negotiating a settlement with your creditor.

Paying off a debt for less than you owe may sound great at first, but debt settlement can be risky.

For one reason, there is no guarantee that the debt settlement company will be able to successfully reach a settlement for all your debts. And you may be charged fees even if your whole debt isn’t settled.

Also, if you stop making payments on a debt, you can end up paying late fees or interest, and even face collection efforts or a lawsuit filed by a creditor or debt collector.

The Takeaway

At some point in your life you may be juggling one or more of these different kinds of debt. Understanding the various types of debts and maintaining a varied mix of loans (including secured, unsecured, installment, and revolving) can help you increase your creditworthiness.

You can also improve your credit by making all of your debt payments on time, and keeping balances on revolving credit (like credit cards) low.

Take control of your finances with SoFi. With our financial insights and credit score monitoring tools, you can view all of your accounts in one convenient dashboard. From there, you can see your various balances, spending breakdowns, and credit score. Plus you can easily set up budgets and discover valuable financial insights — all at no cost.

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Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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Credit counseling services can be a smart way to access professional financial advice at a low cost — or, in some cases, even for free. Usually nonprofits, these organizations can offer educational materials, workshops, and one-on-one counseling with trained financial professionals to help you make an achievable plan to repay your debts, set up a sustainable budget, and more.

It’s important to understand, however, the difference between credit counseling organizations and debt settlement agencies. The latter are usually for-profit companies that may not always be acting with your best interests in mind.

Here’s what you need to know about credit counseling, including how to tell when you might need it.

What Is Credit Counseling?

Credit counseling is a free or low-cost service offered by what are usually nonprofit organizations. Credit counselors can work with you one-on-one to offer fiscal advice and get your finances in order. For example, a credit counselor might help you:

•   Plan a debt repayment strategy

•   Create an overall debt management roadmap

•   Set up or retool your budget

•   Learn how to get a free and accurate copy of your credit report and scores

Many credit counseling services also offer educational resources, like flyers or online information, and workshops or classes that can help many people learn more about how to manage their money at once.

In some cases, credit counselors may offer to reach out to your creditors directly to negotiate with them, which could help you save money. Counselors may be able to get late fees waived, attain a longer repayment period, or ask for lower interest rates.

However, this is not the primary or sole function of credit counseling agencies, and not all credit counselors offer this service.

💡 Quick Tip: A low-interest personal loan from SoFi can help you consolidate your debts, lower your monthly payments, and get you out of debt sooner.

How Does Credit Counseling Work?

Every individual credit counseling agency is different, and they each have their own process that they can walk you through. But in most cases, you’ll be offered an initial consultation with a credit counselor, which may take place online, in person, or over the phone.

During this meeting, the counselor will likely ask a series of questions about your financial standing, and may help you develop a budget or create a debt repayment plan on the spot. Depending on your needs, follow-up appointments may be offered, and you may also get invitations or access to free classes, workshops, educational resources, and more.

In all cases, a credit counseling agency should have your best interests at heart, and should be willing to offer you free information about their services. If a credit counseling agency requests you to pay high fees or pay up front, or refuses to work with you if you can’t afford to pay, you should look for a different organization.

Credit Counselors vs Debt Settlement Agencies

It’s easy to get credit counseling organizations mixed up with debt settlement agencies, but the two are very different — and the difference is critical. Whereas credit counselors are usually non-profit organizations that offer free or low-cost help, debt settlement agencies are very much for-profit companies.

Furthermore, debt settlement agencies charge for the service of negotiating debt settlements with your creditors or collections agencies, rather than offering a more holistic financial education or plan.

Unfortunately, many creditors refuse to negotiate with debt settlement agencies, so hiring one is often a waste of your time. If you do choose to work with a debt settlement agency, remember that under Federal Trade Commission rules , you can’t be charged for their services until they are rendered successfully. Because, again, many creditors simply won’t talk to these companies. If you pay up front, you could be out of luck). In other words, if a debt settlement agency attempts to charge you up front, take your money and run.

Alternative Options for Managing Credit Card Debt

While working with a credit counseling organization can be a great way to access low-cost help in many different financial areas, it’s not the only way to eliminate credit card debt. There are plenty of self-directed strategies that can help you get your money right, right from home.

For instance, debt consolidation is one tactic that may help you get a handle on your credit card debt. Here’s how it works.

To consolidate credit card debt, you’d take out a new loan or a new credit card that allows balance transfers at a 0% interest rate. (Yes, it sounds counterintuitive to fix credit card debt by taking out another loan or line of credit, but hear us out.)

Then, you pay off all of your credit card debts with the personal loan, or transfer all of your balances onto the new credit card. In either case, you’ll now be left with a single monthly payment rather than multiple payments, which can be hard to keep up with and easy to forget about.

Both tactics can also help you save money on interest, too, which can help you get out of debt faster and more efficiently. Different types of personal loans often have lower interest rates than credit cards do, and if you go the balance transfer route and choose a card with a 0% rate, you may save yourself from paying any additional interest at all.

Beware, though: Those 0% balance transfer rates are usually only promotional, and wear off after a certain period of time, like a year. At that point, if you hadn’t paid off the balance in full, you’d likely be stuck paying double-digit interest on whatever was left over once again.

💡 Quick Tip: Swap high-interest debt for a lower-interest loan, and save money on your monthly payments. Find out why SoFi credit card consolidation loans are so popular.

The Takeaway

If you’re struggling with credit card debt or simply looking for professional financial help from a budget-friendly source, pursuing credit counseling can be a smart step to take. These nonprofit organizations offer a variety of different workshops, services, and materials that can help you fashion a more sustainable financial future.

Think twice before turning to high-interest credit cards. Consider a SoFi personal loan instead. SoFi offers competitive fixed rates and same-day funding. Checking your rate takes just a minute.

FAQ

What is the purpose of credit counseling?

Credit counseling exists to help people find better ways to manage their money and to create sustainable budgets and debt management strategies. Usually nonprofit organizations, credit counseling agencies may offer workshops, educational materials, and one-on-one counseling services at a low cost, or even for free, to people who need some help getting their money right.

What is the credit counseling process?

While each credit counseling organization is different, in most cases, you’ll be offered an initial credit counseling consultation appointment that may last about an hour and take place in person, on the phone, or through a video conferencing platform. You may be offered follow-up appointments as well as educational resources and workshops. While most credit counselors are part of nonprofit organizations, there still may be some fees associated with their services, though these are usually much lower than a professional financial advisor’s fees.

Do you need credit counseling?

Only you can decide if you need to pursue credit counseling, but if you’ve been struggling with credit card debt and found yourself unable to create or stick to a sustainable debt repayment strategy, credit counseling could help.

Photo credit: iStock/Rockaa

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If you’re like most Americans, you love your plastic and swiping or tapping through your day. In fact, about 84% of Americans have at least one credit card, with the average wallet holding three.

The national love affair with credit cards is built on their convenience, how they provide a line of credit to enable buying things we can’t quite afford to pay for with cash, and those enticing rewards that are often offered.

But the picture is not altogether rosy: As a nation, US citizens have more than $1 trillion in credit card debt. And with interest rates averaging over 20%, that debt can be hard to chip away at.

To help you better understand how credit cards work, how much credit card debt people typically have, and what are smart strategies for paying down credit card debt, keep reading. You’ll learn interesting facts as well as helpful hints.

10 Facts About Credit Card Debt

Ready to learn more about credit card debt, a form of revolving debt? These 10 credit card facts will help you better understand who has how much debt and where difficulties paying the balance typically crop up.

1. More Than Half of Americans Have Outstanding Credit Card Debt

A majority of active credit card accounts carry a balance, according to the American Bankers Association. The specific figure is 56%. This indicates that carrying a balance is a common situation for many Americans, even with the eye-wateringly high interest that’s charged.

Recommended: Tips for Using a Credit Card Responsibly

2. Households with Credit Card Debt Owe an Average of Almost $8,000

American families had an average credit card balance of $7,951, according to calculations using Federal Reserve Bank of New York and US Census Bureau data. In 2013, that figure was $5,508.

Just because this is the norm, it doesn’t mean that it’s ideal: The best-case scenario is to only charge as much as you can afford to pay off in full every month.

3. It Can Take More Than a Decade to Pay Off $7,951 in Debt

Racking up credit card debt takes much less time than getting rid of it. Let’s assume that like the average American, you have $7,951 in credit card debt, as noted above.

At the current average interest rate of 21.19% on existing accounts, with a $150 monthly payment, it would take you 158 months — or 13 years and two months — to pay that off. And you would pay $15,606.40 in interest, or almost twice the original amount you charged!

But the more you can pay each month, the faster you’ll extinguish the debt. In this example, if you increase your monthly payment to $500, you’d pay off the debt in just a year and seven months and only spend $1,465.06 in interest. These scenarios are, however, assuming that you are not accruing new debt and therefore paying off larger credit card bills.

4. Gen Xers Have the Most Credit Card Debt

Ready for more credit card facts? Here is how age and debt intersect. Gen Xers, the generation that includes people born between 1965 and 1980, have the highest average credit card balance: $9,589. Next in line are Baby Boomers, born between 1946 and 1964, who have somewhat less debt — $8,192 on average — than Gen Xers.

5. Alaskans Have the Highest Credit Card Debt

In a state by state analysis of credit card debt, Alaska residents led the pack with $7,324 per person. Those who live in Wisconsin were found to have the lowest at $4,987.

6. 42% of College Students Have Credit Card Debt

The habit of carrying credit card debt unfortunately starts early, with more than four out of 10 college students carrying a balance on their credit cards. Of these, 28% say their debt exceeds $2,000. They say they accumulated that amount due to nonessential purchases, such as impulse buys, Uber rides, or fancy coffees.


💡 Quick Tip: To avoid paying interest, pay off your credit card bill in full and on time each month. Only making the minimum payment each month can lead to paying a lot in interest over time.

7. One in Three Americans Owes More On Credit Cards Than They Have Saved

This may be a scary fact about debt, but one in three US adults owes more on their credit card than they have saved. In fact, 36% say this is the case, versus just 22% a year earlier. That shows a two-sided problem: too much spending and too little saving.

Recommended: Paying Off $10,000 in Credit Card Debt

8. Richer People Have Credit Card Debt Longer

More interesting credit card debt facts: People who earn more than $100K a year are more than two times as likely as lower earners to have credit card debt for five years or longer. Among six-figure earners, 72% say they have had debt for at least a year vs. 53% of those who earn less than $50,000 per year. When considering those who’ve held credit card debt for five years or more, you’ll find that 27% of the high earners vs. 13% of the lower earners are in that situation.

Perhaps this statistic suggests that high-earners feel they have the means to handle debt and therefore don’t rush to repay it.

9. Men Have More Debt Than Women

Men have an average of $6,357 in credit card debt, while women have an average of $6,232. Perhaps not a huge difference, but so much for the myth of women shopaholics using credit cards to fill an overflowing closet with shoes.

There are many potential reasons for this difference, but some studies have found that women are less comfortable with debt.

10. There’s a Good Chance You’ll Die With Credit Card Debt

Here’s the last of these debt facts, and it can be a grim one: Nearly three-fourths of Americans are in debt when they die, according to one benchmark study.

And 68% die with credit credit card balances — more than the share who have mortgage debt (37%) or car loans (25%) when they pass away. That’s not exactly a desirable legacy. Although family members don’t generally become responsible for the debt, it may be taken out of the deceased person’s estate.

Why Is Credit Card Debt So Common?

There are many reasons that Americans have so much credit card debt, from rising healthcare and educational costs to lack of emergency savings to a cultural consumerism that encourages people to live beyond their means.

Regarding that last point, you may hear about the phenomenon referred to as Fear of Missing Out or FOMO spending, which is a modern version of “keeping up with the Joneses.” In other words, because your friends, coworkers, or influencers you follow on social media are buying something, you feel you should as well.

Or perhaps part of the problem can be explained by what is known as lifestyle creep. This situation occurs when you earn more money but your spending rises too, so your wealth doesn’t grow. For example, if you took a new, higher-paying job and decided to lease a luxury car or take a couple of lavish vacations, your wealth wouldn’t increase, though your credit card balance might.

Tips on Avoiding Credit Card Debt

Perhaps these facts about debt will motivate you to work on avoiding a credit card balance. If so, the following strategies could help.

•   Review different budgeting methods, and find one that works for you. Many people use the popular 50/30/20 budget rule, for example. Also, see if your bank offers tracking and budgeting tools to help you rein in spending.

•   Gamify savings. You might try sleeping on it rather than making impulse buys to see if the urge to spend passes; it often does. Or go on a spending freeze for a specific period of time or for a certain kind of purchase (say, no dining out in March; no clothing purchases in April).

•   Try buying with cash or your debit card vs. plastic. That will help prevent your debt from snowballing.

•   Consider trying a balance transfer card, which typically gives you a period of zero interest during which time you can pay down what you owe.

•   In terms of a debt payoff strategy, you might investigate getting a personal loan with a lower rate than what your card charges. That could allow you to pay off the plastic debt and then have more manageable monthly payments.

•   Seek help if you are really struggling to get your debt under control. Nonprofit organizations can help you accomplish this.

Opening a Credit Card

Now that you know some facts about credit card debt and ways to pay it off, you may be looking for a new card that better suits your financial and personal goals. Shopping around to compare features, such as interest rates and rewards, can be a wise move.

Whether you're looking to build credit, apply for a new credit card, or save money with the cards you have, it's important to understand the options that are best for you. Learn more about credit cards by exploring this credit card guide.

FAQ

What are the main causes of credit card debt?

Credit card debt can crop up in a variety of ways. Sometimes it’s because expenses get pricier, whether due to lifestyle creep or inflation. Other times, it’s not being mindful about daily spending and making impulse buys. Given how many Americans have more credit card debt than money saved, it’s a common but challenging issue.

How much does the average person have in credit card debt?

Credit card debt facts reveal different angles on this number. The average American household has $7,951 in credit card debt. Some studies put the individual figure at $5,573.

How serious is credit card debt?

Credit card debt can be very serious. It’s high-interest debt, and it can be difficult to pay off. It can make it hard for individuals to save for their future and can negatively impact their debt to income ratio, which can be an issue when applying for loans.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

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