Credit card debt is usually high-interest debt, meaning what you owe can snowball. You might charge some holiday gifts, then need new brakes, and then a friend asks if you can join on a low-cost getaway to Mexico. Next thing you know, you have a sizable balance due. And chipping away with minimum payments isn’t paying it down too well.
So how do you know if your credit card debt is actually too much? Take a closer look at the factors here, plus tips for what to do when your credit card debt veers into “too high” territory.
Managing Monthly Credit Card Payments
Many people believe that as long as they can afford the monthly payments, their level of credit card debt is fine. But faithfully making the minimum monthly payment on your credit card might not be a good indicator of whether you have too much credit card debt.
Generally speaking, it can be helpful to pay off your entire balance each month, but that is not a realistic option for many — and it can be easy to just pay the minimum amount required. This can be problematic: Thanks to compound interest, paying only the minimum amount can actually cause your debt to grow.
For example, let’s say you have $5,000 worth of debt with a 20% interest rate and are paying off $100 a month. At that rate, it would take you 109 months (9-plus years) to pay off the original $5,000 and would cost you an extra $5,840 in interest alone. And, yes, as you may have noticed, the interest amounts to more than the principal in this scenario.
Curious how your credit card payments stack up? Use a credit card interest calculator to see exactly how much you can expect to pay in interest. That can help you see how the numbers stack up and then get a better handle of how your debt could grow in the future.
💡 Quick Tip: Some lenders can release funds as quickly as the same day your loan is approved. SoFi personal loans offer same-day funding for qualified borrowers.
Credit Card Utilization
One helpful way to determine if you’re being smart with your credit cards is to look at your rate of credit card utilization. Credit card utilization is the amount of debt you have compared to the total amount of credit that is available to you.
It can come as a shock to people that using their full line of credit can negatively impact their credit score, but in general, it is commonly recommended to use only 30% of the credit available. Credit reporting agencies use your credit card utilization percentage as an important part of determining your credit score.
What does that look like in practice? If you have a credit card with a $10,000 limit, and you spend $1,000 on a new couch, $900 on new brakes, and $500 on a plane ticket, you’re using $2,400 — or 24% of your available credit. That’s relatively close to that 30% threshold, so you’ll want to consider treading carefully.
If, on the other hand, you made the exact same purchases but you only have access to a $5,000 line of credit, you would be using 48% of your available credit. A credit card utilization rate of 48% has the potential to negatively impact your credit score.
If you’re concerned about your credit score, you may want to keep your credit card usage to below 30% of the total credit line available to you.
Debt-to-Income Ratio
Another important consideration when looking at your credit card debt is your debt-to-income ratio. Your debt-to-income ratio is essentially a measure of how much of your pretax income goes to paying monthly debt, like car payments, student loans, and credit cards.
If your debt-to-income ratio is very high, meaning that a large portion of your monthly income goes to paying off debt, some lenders might be reluctant to lend to you.
This means that you could be charged a higher interest rate on new loans or a mortgage because the lender is worried that you won’t be able to make your monthly payments — if you’re able to get a loan at all.
In general, industry professionals suggest that a debt-to-income ratio at or below 36% is considered good, but of course, that will vary by your specific circumstances.
If your debt-to-income ratio is higher than you hope, that may be one sign that you’re carrying too much credit card debt.
If you’re worried about the amount of debt you’re carrying on your credit card, there are several ways to take control.
• First, consider making more than the minimum payment. Many people simply stick with minimum payments because they think that is what they should pay. But increasing your monthly payment could help you pay down credit card debt faster.
• If you’re worried about your credit card utilization rate (and are not carrying a credit card debt balance), you may simply be due for an increase in your line of credit. For example, if you’re still using the same credit card with a $5,000 limit that you got right after college, but now you have a better job and more monthly expenses, you might want to ask your lender for an increase in your credit line in order to improve your credit card utilization rate.
Your debt-to-income ratio can also be helped by either increasing your income or decreasing your debt.
• Since one of the downsides of credit cards is their notoriously high interest rates, you might consider using a personal loan to pay off your credit cards and save you some money on your monthly payments.
• The benefit of paying off your credit cards with a personal loan is that you may be able to trade a high interest rate for a lower interest rate and secure a more favorable repayment plan. A personal loan allows you to make a static payment every month for a set amount of time instead of paying the minimum amount due on your credit card, which can make you feel like you’ll never get out from under credit card debt.
Bear in mind that once you’ve paid off your credit card balances, it’s important to keep them low. Running those balances back up has the potential of making your credit profile less attractive to lenders due to the increased total debt.
And in the future, keep an eye on your credit limit when you’re making big purchases — it can pay off in the long run.
How much credit card debt is too much will depend upon your specific financial situation. Such factors as your debt-to-income ratio and your credit utilization can help determine if your credit card balances are getting too high.
If you have incurred a considerable amount of high-interest debt, you might consider ways to pay that off, including getting a personal loan at a lower interest rate.
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.
SoFi’s Personal Loan was named NerdWallet’s 2024 winner for Best Personal Loan overall.
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.
Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .
Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.
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.
It’s hard to believe that Americans ever got by without plastic, but the credit card is less than 75 years old. There’s a good chance your grandparents could tell you about life in the days of nothing but cash or checks.
Today, about 84% of Americans have at least one credit card, which allows them to quickly and conveniently tap or swipe their way towards purchases. Unfortunately, those rectangles of plastic may make spending a little too easy: The average household has almost $8,000 in this kind of debt.
Here, you’ll learn just how the credit card came into being, as well as smart ways to manage your credit card usage more effectively.
The Origins of Credit
Here’s how the story of the first credit card goes: Businessman Frank McNamara was having dinner at a New York City restaurant in 1949 when he realized he forgot his wallet. Rather than dine and dash, he came clean and asked if he could sign for the meal and pay later.
Though some say this legendary dinner never happened, everyone agrees McNamara founded Diners Club, the world’s first multipurpose charge card, in 1950. McNamara sold Diners Club memberships to friends and acquaintances willing to pay $3 for the “sign now, pay later” privilege at participating restaurants and hotels.
Until that point, only individual stores extended credit to customers. If you couldn’t pay for, say, a dress or a new suit at the general store — and the owner knew you were good for the money — you could run up a tab and pay cash later. But the Diners Club card provided the benefit of credit at multiple locations instead of just one establishment.
💡 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.
Next Came the “Big Four” of Credit Cards
Of course, future entrepreneurs and banks wouldn’t let Diners Club monopolize the charge and credit market for long. Eventually, other cards came on the scene—most notably Visa, Mastercard, American Express, and Discover.
• Visa: In 1958, Bank of America issued the BankAmericard — the first true credit card — to customers in California. While the original Diners Club card required payment in full at the end of each month, BankAmericard users could pay off purchases over time. In 1976, BankAmericard became Visa.
• Mastercard: BankAmericard got a run for its money when a group of banks joined forces in 1966 to create the Interbank Card Association (ICA). In 1969, ICA created Master Charge: The Interbank Card, which became Mastercard in 1979.
• American Express: The American Express Company has been around since 1850, but it didn’t issue its first charge card until 1958. Like Diners Club, the American Express card had to be paid in full each month. That changed in 1987 with the introduction of the Optima card, the first true credit card by American Express. (Fun fact: Elvis Presley was one of the earliest American Express card members.)
• Discover: Discover is the newest major credit card network on the scene. Sears launched the Discover card in 1986, distinguishing it from the pack by charging no annual fees and offering higher credit limits than other cards at the time.
Discover was also the innovator of cash rewards on credit card purchases—back in 1986. At that time, Discover cardholders could earn rewards of up to 1% cash back on all purchases. Incidentally, Discover Financial Services purchased Diners Club International in 2008.
How Credit Cards Have Changed Over Time
A lot has changed since McNamara’s legendary dinner. Take a look at some of the biggest shifts in the credit industry:
The Ubiquity of Credit
In the early decades, credit was curbed by restrictive interstate banking laws. But credit’s big breakthrough came in 1978, when the Supreme Court ruled to allow nationally chartered banks to charge out-of-state customers the interest rate set in the bank’s home state.
Credit expanded as a result, and today, the average American credit card holder has nearly four cards.
The Evolution of Fees
When Diners Club began, it made money by charging stores a 7% fee on all transactions. Today, credit card companies charge interest on debt, too, so they make money when you don’t pay your bill in full. This is what’s typically known as high-interest debt. How high? At the end of 2023, the average credit card interest rate was reported as 24.59%.
Also, Diners Club used to charge nominal membership fees, but by the 1980s, many credit card companies eliminated annual fees to stay competitive.
The Advent of Rewards
The ’80s also brought tangible rewards for using credit cards instead of cash. Discover pioneered cash rewards, allowing cardholders to get a percentage back on purchases charged. And in 1987, Citibank made a deal with American Airlines to give consumers reward points to use for future flights.
Today, consumers continue to use credit card rewards programs to earn cash or points for future purchases, including travel. In fact, more than 87% of credit card users have rewards programs associated with their cards.
How to Control Your Credit
Credit can be convenient and a real asset when you want to buy something you don’t have enough cash to pay for outright. It’s a powerful tool, and one that must be managed wisely. In the summer of 2023, credit card balances in America hit a new milestone, topping a total of $1 trillion. That likely means many people are carrying a significant amount of debt. To avoid having your balances soar too high, consider these ways to take control of your credit.
Build Your Credit History Wisely
It might sound enticing to pay for everything in cash (and thus stay out of debt), but most of us don’t have the cash flow to pay for college, buy a car, and purchase a home outright. Besides, even if you do have the cash to buy everything you need right now, when the day comes to apply for a loan, you’ll need a solid credit history to qualify.
If you’ve never had a single credit card or loan, your credit history is minimal, which means you pose a higher risk to lenders. In that way it pays to borrow, as long as you do so responsibly. That means spending less than you earn and paying your bills on time, every time. Whenever possible, pay off your credit card in full every month.
Consider Prefinancing
Of course, credit cards aren’t the only way to pay for purchases and build a strong debt payment history. Prefinancing (getting access to a sum of money in advance of a purchase), such as taking out a personal loan, is another option. When you apply for a loan, you’re requesting a specific amount of money from a lender and agreeing to repay that loan over a predetermined period of time.
How credit cards work is a different process. When you pay on credit, the credit card network (e.g., Visa) pays the merchant (e.g., Home Depot) for your purchases, and you pay the network back for your purchases each month. If you don’t pay your balance in full, you’ll be charged interest on future payments.
Between the two options, prefinancing may offer the benefit of lower interest rates and shorter loan terms, helping you get out of debt quicker. After all, if you don’t have a system in place to pay off purchases in a reasonable time frame, credit card debt can haunt you for a long time.
Think about it: If you’ve racked up $15,000 in credit card debt at an interest rate of 20%, and make a payment of $300 each month, it will take you 109 months (9+ years) to pay off your debt, including $17,635.48 in interest, by the way. (You can use a credit card interest calculator to see how your own debt stacks up.)
Understand Your Credit Score
Whenever you borrow money via a personal loan or use your credit card, your lenders and creditors send details of those transactions to three major national credit bureaus (Equifax®, Experian®, and TransUnion®). That information is then used to assess your creditworthiness, which is expressed as a three-digit credit score that represents the risk you pose to lenders.
The higher your credit score, the less risky you are in their eyes. FICO® scores are the ones used most often in lending decisions in the United States, with scores typically ranging from 300 (poor) to 850 (exceptional).
Your credit score comprises five categories, and each one has an impact:
• Payment history: Late or missed payments drag down your score.
• Amounts owed: High balances can hurt you; maxing out your credit cards is even more damaging.
• Length of credit history: A long history can increase your score.
• Credit mix in use: A healthy mix of credit cards, student loans, a mortgage loan, etc., can boost your score.
• New credit: Opening several credit accounts in a short period of time can damage your score.
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Build Your Credit Score
If your credit score isn’t where you want it to be, there’s good news: Scores aren’t set in stone. Try these tips to build yours:
Getting out of Credit Card Debt With a Personal Loan
Sometimes the problem is bigger than a low credit score. Unfortunately, some people get so deep into debt that it’s hard to find a way out on their own. One option: A personal loan to pay off credit card debt. This kind of loan usually allows you to consolidate high-interest credit card debt into one lower-interest loan with a fixed monthly payment.
Balance-transfer credit cards are another potential avenue to get out from under debt. Keep in mind, though, that these likely charge balance transfer fees, and your interest rate will be considerable after the promotional period. On the other hand, if you shop around, you may be able to find a personal loan that doesn’t charge origination or other fees.
You might also benefit from free or low-cost financial counseling from a nonprofit organization, such as the National Foundation for Credit Counseling (NFCC).
The Takeaway
Clearly, Americans have become accustomed to and perhaps even reliant on credit cards since they were developed almost 75 years ago. When managed effectively, credit cards are valuable tools to help you pay for the things you need and to sustain the lifestyle you want.
If, however, you feel weighed down by credit card debt, start taking steps to control your credit, rather than letting it control you. Consider your options, such as balance transfer credit cards or using a personal loan, to help you pay off your balance.
Looking to lower your monthly student loan payment? Refinancing may be one way to do it — by extending your loan term, getting a lower interest rate than what you currently have, or both. (Please note that refinancing federal loans makes them ineligible for federal forgiveness and protections. Also, lengthening your loan term may mean paying more in interest over the life of the loan.) SoFi student loan refinancing offers flexible terms that fit your budget.
With SoFi, refinancing is fast, easy, and all online. We offer competitive fixed and variable rates.
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SoFi Student Loans are originated by SoFi Bank, N.A. Member FDIC. NMLS #696891. (www.nmlsconsumeraccess.org). SoFi Student Loan Refinance Loans are private loans and do not have the same repayment options that the federal loan program offers, or may become available, such as Public Service Loan Forgiveness, Income-Based Repayment, Income-Contingent Repayment, PAYE or SAVE. Additional terms and conditions apply. Lowest rates reserved for the most creditworthy borrowers. For additional product-specific legal and licensing information, see SoFi.com/legal.
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.
Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.
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.
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.
Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .
Wedding bands are a symbol of a couple’s eternal love and commitment, but they’re also an added expense in the wedding budget. One way to potentially score a deal on your rings is by shopping during strategic times of the year.
Sales often occur in the weeks between Thanksgiving and Christmas. And you may find a bargain during September and October, when jewelers need to clear out old stock before the holidays.
But February, the month devoted to lovers, can also be a good time to shop for wedding bands. Here’s why.
Reasons to Buy Your Wedding Bands in February
There are a few reasons why you may want to shop for wedding rings during the shortest month of the year.
It’s a Popular Time for Proposals
Many people pop the question between Christmas Eve and New Year’s Day, and Valentine’s Day continues to be one of the most popular holidays for couples to get engaged.
Jewelers know this, and they often prepare for the influx of business by rolling out promotions on engagement rings and wedding bands. Consider hitting the stores between New Year’s Day and Valentine’s Day, before the crowds show up. And if you can, shop during an off-peak time of day when the store is quieter. You may find it easier to try to negotiate a better price for your bands.
💡 Quick Tip: Need help covering the cost of a wedding, honeymoon, or new baby? A SoFi personal loan can help you fund major life events — without the high interest rates of credit cards.
Bridal Fairs Are Kicking Into Gear
Many bridal expos are held in February and March, offering couples a chance to see the latest wedding band styles without the sales pressure. Vendors are there to give tips as well as a good pitch, and some may offer limited-time, expo-related discounts.
Gather up information and coupons at the bridal fair, then give yourselves a day or two to regroup and possibly go make a purchase.
The Timing Works for a Summer Wedding
Jewelers typically recommend shopping for wedding bands at least three to four months before your wedding date — longer if you have your heart set on a one-of-a-kind design. That will give you time to look and look again, get the rings sized, and have any engraving or other customizing done.
For couples getting married in the summer — peak wedding season — this will mean starting the ring buying process in February.
How to Shop For Wedding Bands
No matter what time of year you shop for a wedding ring, it’s a good idea to do a little prep work before you hit the stores. Here are some things to consider doing ahead of time.
Set a Budget
You want bands you’ll love forever, but not at a price that will put you in debt for the rest of your lives. At the start, let your jeweler know what your budget is, and they can work with you to find rings within that range.
Consider a Wedding Set
If you haven’t settled on an engagement ring yet, you may want to look into purchasing a wedding set. This set includes your engagement ring and a matching wedding band. Buying both at the same time could save you money.
Shop Around
As with most major purchases, you’ll want to shop around for wedding bands. Visit different jewelers, including online shops, and don’t be afraid to ask questions about the pros and cons of different metals, gemstones, and designs.
Once you find the bands you want, try negotiating for a better price. You may be able to increase your chances of getting a deal by offering to pay all cash.
How to Pay For Your Wedding Bands
A wedding ring is usually cheaper than an engagement ring, but it can still take a significant bite out of your budget.
According to The Knot, the typical men’s wedding band costs around $510, while the average woman’s band runs closer to $1,100. Prices can vary widely based on a number of factors, including the metal type, overall design, and gemstones.
Let’s look at a few common ways to finance wedding rings.
No-Interest Credit Cards
Larger jewelry stores usually offer some sort of in-store financing, including no-interest credit cards. You can also apply for one directly with a lender.
This option lets you buy the bands you want today, which is a major benefit. And it could make good financial sense if you’re able to pay off the balance before the promotional period ends. However, if you can’t, you’ll have to pay interest on whatever you owe. And that interest rate probably will be higher than other credit card or loan offers available to you.
Buy Now, Pay Later
Think of buy now, pay later (or BNPL) as a kind of installment payment plan. It allows you to purchase your wedding bands today and then spread out payments over a set number of weeks or months, often for zero or low interest. Klarna, Afterpay, and Affirm are all common examples of BNPL providers.
Usually, no minimum credit score is required for approval. Rather, providers will consider the amount available on the debit or credit card you’re using in the transaction, your history with that lender, and key details about the item you’re buying.
Also, a soft credit check is typically conducted to approve or reject your request, but it does not impact your credit score.
As with a no-interest credit card, if you pay off the BNPL plan as planned, you may not incur interest or fees. But if funds aren’t paid on time, or a longer-term plan is chosen, you could be hit with a high interest rate and/or late fees.
Personal Loan
You can get a personal loan from a bank, credit union, or online lender. Many, but not all, personal loans are unsecured, which means you won’t need to put up any collateral, such as a house or car. Instead, lenders will consider your creditworthiness.
Most personal loans are paid back within three to five years, and the interest rate tends to be higher if there is no collateral. The better your credit score is, the lower the interest rate and monthly payment will be. However, the lower the payment, the longer it might take you to pay off the loan.
Generally speaking, once you’re approved for a loan, you can receive funds within days. In some cases, you may be able to get the money within a day or two. This quick influx of cash can come in handy if you’re planning to haggle for a better price on the band.
💡 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.
The Takeaway
Wedding bands can cost hundreds or even thousands of dollars, but fortunately, there are ways couples may be able to save money. Shopping during certain times of the year, including February, can help. During that month, you may be able to take advantage of special promotions, including those offered at local bridal shows. Be sure to shop around, and when you find the ring you want, don’t be afraid to try your hand at haggling.
If you need help paying for the rings, you have several options to explore. For example, no-interest credit cards and buy now, pay later programs can both provide you with the funds you need right away. However, if you don’t pay off the balance before the promotional period ends, you could face high interest rates. A personal loan is another way to pay for rings. While you may not be required to put up any collateral, the lender will consider your creditworthiness.
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.
SoFi’s Personal Loan was named NerdWallet’s 2024 winner for Best Personal Loan overall.
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.
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.
Americans are carrying a record amount of debt lately. Just last summer, the Federal Reserve Bank of New York announced that U.S. citizens hit a new milestone: $1 trillion in credit card debt. And when you look at overall debt, the number soars to an eye-watering $17 trillion, with the typical American having $21,000-plus in personal debt (not including mortgages).
Debt seems to be woven into everyday life. Yes, inflation is down from the scary heights of 2020 and 2021, but it’s still an issue for many. And the overall cost of living is climbing, too, which may be why Americans are taking on more debt. A person has to eat, right, and live their life? Debt can be what gets people through.
Taking a closer look at how debt is tracking by age can help as you examine your own situation and think carefully about how you will manage your own debt load.
Breakdown Of Average Debt By Age
Here, you’ll learn more about the latest Federal Reserve and U.S. Census Bureau data and what it reveals about how Americans are using credit. Overall, people in their high earning years (early middle age) carry the most debt, typically in the form of mortgages, while younger families carry more student loan debt. Let’s take a closer look.
Age 35 and under
Percentage of families with debt: 81%
Total median debt per household: $39,200
For the millennials, education debt reigns. Forty-four percent of young households hold student loan debt compared to 28.3% with mortgage debt. This tells us that people in this age range are likely putting off home ownership due to the burden of student loans. The median student loan debt was $18,500 while the mean student loan debt was $33,000. That can add up to a hefty monthly payment that could discourage taking on a mortgage loan as well.
Nearly half of millennial households are also carrying a credit card balance from month to month at a median of $1,400. Paying interest on high credit card balances can quickly eat away at income — and savings.
Age 35-44
Percentage of families with debt: 86.2%
Total median debt per household: $93,700
As you can see, families in this age range have taken on more debt. In this bracket, education debt has increased (median: $20,000) but the percentage of families with student loans has dropped to 34%. Instead, mortgage debt accounts for much of the overall debt increase. Fifty percent of households have mortgage debt in this age bracket, with a median housing debt of $93,700. Their credit card debt is climbing too, with 49% carrying a median $2,500.
These increases show that people in this age range are taking on more debt — likely because they’re earning more and doing more: they’re settling into their careers, buying houses, and starting families.
Age 45-54
Percentage of families with debt: 86.6%
Total median debt per household: $89,900
Most households that are firmly in middle age continue to hold debt, but the amount of debt is much less than younger households. Fewer hold student loan debt (24%, median: $20,000), and about the same number have mortgages (53%), but the amount they owe is less (median: $125,000).
There are a couple of possible explanations for this: one is that they’re earning more and have had more time to pay off their student loans and mortgages. The other is that this generation missed some of the soaring higher education costs that younger generations have had to grapple with.
They also likely entered the workforce and established their careers before the recession, while younger generations are more likely to have been hit hard by career-stalling hiring freezes and wage cuts as they were just starting out. In short, this generation and those in older households haven’t necessarily had to depend on financing as much as younger generations to get their adult lives started.
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Age 55-64
Percentage of families with debt: 77.1
Total median debt per household: $69,000
This age bracket continues to see drops in overall debt. They owe less on their mortgages and even less on education loans. With fewer large expenses related to education, housing, and family rearing, households in this age bracket can focus on paying down debt and building savings as they prepare for retirement.
Age 65-74
Percentage of families with debt: 70.1%
Total median debt per household: $42,000
Households in this age range are likely beginning to or have begun their retirement. At this point, they are probably tightening their budgets to live on retirement savings, pensions, and social security. As a result, they’re spending — and borrowing less.
Despite lower mortgage and education debt, 42% of households are carrying a pretty high balance on credit cards (median: $2,500). This suggests that for smaller purchases, people rely heavily on this convenient, yet high-interest form of borrowing.
Age 75 and up
Percentage of families with debt: 49.8%
Total median debt per household: $20,600
Seniors in this bracket are most likely retired and living on a fixed income. At this point, a good rule of thumb is to have little to no debt. While there are fewer and lower levels of borrowing in this bracket compared to the others, close to 50% are carrying debt. While much of this is accounted for by small mortgages, some of it may be related to high cost of medical care and senior living facilities.
💡 Quick Tip: Before choosing a personal loan, ask about the lender’s fees: origination, prepayment, late fees, etc. SoFi personal loans come with no-fee options, and no surprises.
How Much Debt Is Too Much?
Americans have clearly become accustomed to borrowing in order to move through their everyday lives. In fact, financing is often a necessary step in order to get the graduate level training needed for a professional career or to buy a home that will become a financial asset. But are we culturally becoming too comfortable with borrowing larger and larger sums of money? And how do you know when you’ve over-extended yourself?
One way to find out if you’re carrying too much debt is to calculate your debt to income ratio by dividing your monthly debt payments by your monthly income. For instance, if your total debt payments (student loan, credit card, mortgage, car loan, etc.) come to $2,500 per month and your after-tax monthly income is $8,000, your debt-to-income ratio would be 31.25%. That means that a little over 31% of your income goes straight to your debts.
As a rule of thumb, the lower your debt to income ratio the better: a ratio of around 30% is considered very good, while a ratio of 40% or higher could threaten your financial security.
Carrying debt is enormously stressful, especially if it keeps you from being able to save enough to feel financially secure. Here are some solutions if you’re looking for a strategy for paying down your debt.
Make a Debt Inventory
Start by listing out all of your outstanding debts and sorting them based on whether they are “good” debts (debts taken out to help build wealth or income potential like mortgages and student loans) or “bad” debts (high interest loans and loans to buy things that don’t appreciate like credit cards and auto loans). The bad, or high-risk debts will be the ones you’ll want to take on first.
Create a Debt Pay-Down Goal
Zero in on the loans that cost you the most (in terms of high interest, but also high stress). Then, set a realistic goal for paying it down — as well as a budget for how to swing the extra payments. For instance, you might cut back on some of your unnecessary spending for a set period of time, or choose to take on a side hustle to earn some extra income.
Consider Consolidating Your Debt
If you are carrying a high credit card balance or other high-interest debt, but have a steady income and good credit, you may be able to make your repayment simpler and cheaper by taking out lower-interest personal loans to pay off those debts. You can’t use an unsecured personal loan to consolidate student loan debt, but it can be immensely helpful if you’re trying to get out from under credit card debt.
Many Americans have debt, with younger people having more student debt and those in midlife having more in the form of mortgages.
If you’re concerned about managing your debt (especially from credit cards), you might consolidate your high-interest debt into one monthly payment, which might offer a lower interest rate that could help you get out of debt sooner.
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.
SoFi’s Personal Loan was named NerdWallet’s 2024 winner for Best Personal Loan overall.
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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.
Cheers! Here you are again at the start of the New Year. It’s a fresh start and a great time to think about your goals for the 365 days ahead and how to meet them.
For many people, that may mean taking control of their finances and maximizing their money. There are, of course, all kinds of ways to do this, from bringing in more income to spending less to saving and investing well.
Read on to learn 37 smart, creative ideas that can help you enrich your bank account and net worth in 2024. Try one or a bunch, and see how they can contribute to your financial health this year.
Smart Financial New Year’s Resolutions
Start 2024 by getting on the path to financial wellness. Here are 37 money-saving resolutions to help you maximize your cash in the year ahead.
1. Save 20% Every Month
Here’s our first New Year’s resolution: Consider ramping up your savings by following the 50/30/20 budget rule. This wise formula says to save 20% of your income every month. The other 50% of your money should go toward your needs (housing, food, utilities, debt), and 30% can go toward discretionary items, or the wants in life.
2. Try a Weekly Budget
With so many transactions coming in and going out (and so many of them being automated these days), keeping a monthly budget can seem intimidating. How do you track and manage all of the credits and debits? Are you going to overdraw your account?
There are many different budget methods, but with a weekly vs. monthly budget, the amounts you have to track are smaller and more manageable, and you may be more likely to stick to them. Try making a spreadsheet of all your weekly income and expenses, and then decide where you can cut back to save money.
3. Decrease Discretionary Spending
Has your once-a-week matcha latte habit become a daily thing? And exactly how many streaming platforms do you subscribe to? Spending money on entertainment, takeout, coffee, and other wants can add up quickly. So when you create your budget, figure out ways that you can reduce spending on things you don’t actually need. Put the savings towards a goal like creating an emergency fund or saving for that trip to Croatia.
4. Switch Up Your Budget Cuts
Is one of your New Year’s resolutions to reduce your spending, as noted above? If so and you try to slash everything at once, you can wind up feeling deprived and losing motivation. Instead, you might try cutting back on, say, those fancy coffees one month and on movies the next. You’ll still save money, but the rotating nature of cuts and the challenge of “no flat whites this month” can keep it interesting.
💡 Quick Tip: Tired of paying pointless bank fees? When you open a bank account online you often avoid excess charges.
5. Stop Storing Your Credit Card Information
Yes, adding your credit card details to your online accounts makes it super easy to check out, which is exactly the problem. That simplicity can also lead to increased spending on impulse purchases. Instead, remove those saved cards and force yourself to manually type in your credit card number when you want to purchase something. If you have to get up to find your card, that can be a way to reflect for a moment and potentially avoid impulsive purchases that you don’t actually need.
6. Find a Savings Buddy
Economizing can be easier when you have a kindred spirit to support you. If you have a friend or relative who is also trying to save money or has succeeded at doing so in the past, recruit them to help you. The two of you can text when you need advice on a big purchase you are contemplating or when bills pile up and then stay strong together.
7. Schedule Automatic Transfers
When your paycheck hits your checking account, it likely makes you feel flush and ready to splurge a little. Instead, pay yourself first. Make it a 2024 resolution to set up automatic transfers from your checking to your savings account. All you have to do is set the amount and the date you want the recurring transfer to occur.
Or you can likely send part of your paycheck’s direct deposit into your savings (ask your HR team how to set this up). Either way, you can watch your savings blossom automatically.
8. Earn Credit Card Rewards
If you’re not already earning rewards with your credit card, make 2024 the year to do so. With credit card rewards, you can get cash back when you make purchases. Then, once you reach a certain amount, like $25, you can transfer it into your savings account or to pay down your balance. As long as you don’t overspend and wind up with debt issues, credit cards can be helpful in this way when it comes to reaching your savings goals.
9. Round Up Prices
If you haven’t already tried a round-up app, consider doing so this New Year. These work by, say, charging you $7 for a purchase that really cost you $6.35, and depositing the additional 65 cents into savings or putting it towards your debt. Acorns is an example of this kind of app, but there’s a good chance your bank offers this feature as well. Rounding up can help move you towards financial security.
10. Pay Off High-Interest Credit Cards
Credit card interest rates are notoriously high, with rates topping 20% on average at the end of 2023. If you’re not careful, you could be spending hundreds of dollars every month on credit card interest. Create a plan to become debt-free for 2024, and prioritize paying off your high-interest credit cards. For example, you could use the debt avalanche method, where you pay off the card with the highest-interest rate first and then move on to the card with the next highest interest rate, and so on.
11. Sign Up for a Balance Transfer Credit Card
If you have credit card debt, you may want to pay it down faster as a New Year’s resolution for 2024. Signing up for a balance transfer credit card could help. You’ll typically pay 0% interest on your debt for a certain period of time (say, six to 18 months), before your interest shoots back up.
Just make sure you pay off your balance before that introductory period is over, or else you’ll be right back where you started. And if the interest rate is higher than your current credit card, your situation could be made worse if you don’t pay it off in time.
12. Recycle
Yes, it’s more convenient to toss cans and bottles in the trash. But each one probably could net you five to 10 cents if you redeem them, which is typically easily done at your local supermarket. Plus it’s good for the planet. While it may not yield the down payment for a house, every little bit of cash put into savings can help, especially when compound interest kicks in.
13. Find a Side Hustle
If you have any free time at night or on the weekends, then you can freelance or work some other sort of side hustle. Whether it’s tutoring school children or driving for a rideshare service, those extra dollars can make a serious impact on your savings. There are plenty of low-cost side hustles to consider. Even renting a room in your house on Airbnb could put hundreds or thousands of extra dollars in your account as the months go by.
Decluttering your home may be another New Year’s resolution you have for 2024. How about merging that resolution along with a money-saving resolution? There are plenty of places to sell your stuff, from clothing to electronics to cookware, whether it’s gently or never used. Consider sites like eBay, Craigslist, and Facebook Marketplace.
15. Save for Retirement
If you’re young, you may feel like you don’t have to worry about retirement just yet. But the truth is that time is likely to pass faster than you think it will. Plus, if you start saving right away, you’ll make more money on your investments through the power of compound interest. Take advantage of your company’s 401(k) matching policy, if they have one, and beef up your retirement savings in the New Year.
16. Create an Emergency Fund
If you were to lose your job tomorrow, would you have enough money to last you until you found something new? What if you had a medical emergency or your house suddenly flooded? Having at least three to six months’ worth of savings in an emergency fund will help you cover any sudden, unexpected expenses, and help ensure that your budget and financial goals won’t be derailed.
17. Use Coupons for Groceries
If you’re not a couponer already, 2024 is a great time to start saving this way. Check websites like Coupons.com and P&GGoodEveryday or your weekly newspaper for the latest deals and discounts at your local grocery stores and other retailers. It can be an easy way to make sure you aren’t leaving money on the table.
18. Buy Generic
Did you know that generic products might be the same as name-brand products you love but without the fancy label? Whether you’re at a grocery store or a pharmacy, look into buying those store-brand and generic products instead, because you could end up saving money while still purchasing high-quality products.
19. Choose a Day to Review Your Finances
In order to stay on top of your financial goals in 2024 (or any year, in fact), it’s helpful to set aside one day a week to go over your spending. Pay your bills and check your accounts on this day as well to ensure you’re meeting your benchmarks.
20. Create an Investment Portfolio
The average interest you’ll earn on a traditional savings account is only 0.61% as of the end of 2023. But if you research different investments like stocks and bonds, you’ll see that the market historically earns 10% annually on average, though past performance is no guarantee of future returns.
Perhaps 2024 is a good year to invest in the market or invest more if you are already in the market. Just make sure you invest according to the risk you are willing to take. For instance, if you don’t have much to invest, then you might stick to investing in high-performing, more established and stable companies. But if you have money to spare, you may try investing in riskier, smaller and newer companies.
21. Look Into a High-Interest Savings Account
A high-interest savings account is going to give you more bang for your buck when it comes to your savings. The rates frequently fluctuate, but you may find annual percentage yields between 4% and 6% as of December 2023 — significantly higher than the rate of a standard savings account rate.
Get up to $300 when you bank with SoFi.
No account or overdraft fees. No minimum balance.
Up to 4.00% APY on savings balances.
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22. Use Cash Instead of Credit Cards
If you use cash instead of credit and debit cards, you may be less likely to spend money in 2024. Credit and debit cards can make it easy to swipe and tap without thinking about the consequences. Paying $100 in cash for your groceries can often have much more of a psychological effect than simply swiping your card, and it can help encourage you to save more money.
23. Look Into a New Bank
Are you aware of all the monthly bank fees you’re paying just to keep your account open? If you overdraft your account, do you get charged a hefty fee? Does your bank charge you to use an ATM outside of their network? Examine all the fees you are currently paying and then look into competitors to see if they charge lower fees — or perhaps no fees at all. Online banks vs. traditional banks typically charge fewer (or no) fees and pay higher interest rates.
24. Start a Coin Jar
Why not go old-school in 2024? Put all your loose change into a coin jar, and then at the end of the month, take it to your bank to cash it in. This is better than using a Coinstar machine, which will typically take 11.9% of your money when you convert it into cash. Note: You may have to roll the coins before depositing at the bank, but this can be done while listening to your favorite podcast. Or consider it a mindfulness moment.
25. Use Financial Apps
Financial apps are an easy way to keep track of your spending in the New Year. All you have to do is link your financial accounts to these apps to see how much you’re spending and what you’re spending your money on. These apps will even give you suggestions on how to save money and improve your finances, as well as remind you when bills are due. Your bank is likely to offer a tool like this, which can be especially convenient as you track your spending and pay bills.
26. Negotiate Your Bills
Think you’re spending too much on cable? Is your cell phone company ripping you off? Be a savvy consumer, and tackle it in 2024 to save more. Call your service providers, and try to negotiate a lower monthly rate. If you aren’t successful, you could always use services like Trim to negotiate your bills down so you can save more every month.
27. Do Meal Prep
You know how it goes: Suddenly, it’s 7pm, you’re starving, and haven’t even started to think about dinner so you wind up ordering in. Avoid that in the New Year by preparing your meals in advance. That way, you will have food in the fridge when you’re hungry, and you won’t be tempted to eat out. It’s also a good idea to bring lunch to work so that you won’t be tempted to purchase pricey food on your break with coworkers.
28. Cancel Automatic Subscriptions
Go through your bank statements to see if there are any automatic subscriptions you don’t need or remember signing up for. Cancel them immediately. If a company was charging you without your knowledge, you may be able to request your money back.
29. Decrease Energy Costs
Not having an energy-efficient home can be costly. You may be wasting hundreds of dollars each month because you’re leaving the lights on or running the heater or A/C for hours on end. You can make a few changes like sealing up drafty windows and attics to start saving money on your utility bill in 2024.
30. Unsubscribe from Email Lists
If you have a problem with making impulse purchases, then unsubscribe from your favorite retailers’ email lists. That way, you won’t be as tempted to spend because you’ll no longer receive news about flash sales or buy-one-get-one offers.
31. Trade in Your Gas-Guzzling Car
Gas prices have fluctuated considerably lately but can still be quite high. Trading in your SUV for a more efficient vehicle could be a smart move. Hybrid and electric vehicles are good options as well. Though you may pay a premium for them up front, you’ll save a lot on gas in the long run.
32. Ask for Discounts
Here’s a New Year’s resolution to adopt: Whenever you’re purchasing tickets, booking a hotel, or going to an event, ask if there are any discounts. You may be able to snag a discount if you’re a student, a senior, a member of the military, a resident of the state, or even an AAA member.
33. Stop Buying Retail
When you go to retail stores, you’re going to pay full price. Instead, when reasonable, look for used items on sites like eBay and Facebook Marketplace (though be wary of fraud and scams that can happen when purchasing this way). Flea markets and thrift stores may also have the goods you might need (cookware, lamps, you name it) at steeply discounted prices.
34. Join a Warehouse Club
Enlist a friend to join, too, and then share the spoils of buying in bulk. Since the likes of Costco and BJ’s tend to have mega-sizes and packs, you can split the low-cost food and other items you purchase. Say, you buy a dozen burgers and keep half; your friend buys the same number of buns and gives you six. It’s a win-win.
35. Go on a Spending Freeze
Don’t spend any “out and about” money for a week and see how you feel. This means you’ll need to brew your own morning coffee and eat homemade meals. You’ll also need to avoid downloading movies, but at the end of the week, you should be able to more easily distinguish your wants from your needs. This can help make budgeting that much easier.
36. Save Your Tax Refund
What to do with your tax refund? If you get one this year, instead of spending it on a new mobile device or a vacation, put it into your savings. It’ll accrue interest, and you can then put it toward a larger purchase or goal down the line.
37. Work Out at Home
This one is a double whammy if you want to get fit in the New Year, too. Purchase some weights online, and tune into your favorite trainers on YouTube to start burning fat and gaining muscle. You can cancel your expensive gym membership and forget pricey personal trainers while feeling better about yourself in 2024.
Looking Into SoFi Checking and Savings
Here’s another good New Year’s resolution: Make sure you’re happy with your banking partner.
Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with direct deposit, you’ll get a competitive annual percentage yield (APY), pay zero account fees, and enjoy an array of rewards, such as access to the Allpoint Network of 55,000+ fee-free ATMs globally. Qualifying accounts can even access their paycheck up to two days early.
Better banking is here with SoFi, NerdWallet’s 2024 winner for Best Checking Account Overall.* Enjoy up to 4.00% APY on SoFi Checking and Savings.
SoFi members with direct deposit activity can earn 4.00% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below). Deposits that are not from an employer or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate. SoFi members with direct deposit are eligible for other SoFi Plus benefits.
As an alternative to direct deposit, SoFi members with Qualifying Deposits can earn 4.00% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that, in the aggregate, are equal to or greater than $5,000 to an account holder’s SoFi Checking and Savings account (“Qualifying Deposits”) during a 30-day Evaluation Period (as defined below). Qualifying Deposits only include those deposits from the following eligible sources: (i) ACH transfers, (ii) inbound wire transfers, (iii) peer-to-peer transfers (i.e., external transfers from PayPal, Venmo, etc. and internal peer-to-peer transfers from a SoFi account belonging to another account holder), (iv) check deposits, (v) instant funding to your SoFi Bank Debit Card, (vi) push payments to your SoFi Bank Debit Card, and (vii) cash deposits. Qualifying Deposits do not include: (i) transfers between an account holder’s Checking account, Savings account, and/or Vaults; (ii) interest payments; (iii) bonuses issued by SoFi Bank or its affiliates; or (iv) credits, reversals, and refunds from SoFi Bank, N.A. (“SoFi Bank”) or from a merchant. SoFi members with Qualifying Deposits are not eligible for other SoFi Plus benefits.
SoFi Bank shall, in its sole discretion, assess each account holder’s Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 4.00% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.
SoFi Bank reserves the right to grant a grace period to account holders following a change in Direct Deposit activity or Qualifying Deposits activity before adjusting rates. If SoFi Bank grants you a grace period, the dates for such grace period will be reflected on the APY Details page of your account. If SoFi Bank determines that you did not have Direct Deposit activity or $5,000 in Qualifying Deposits during the current 30-day Evaluation Period and, if applicable, the grace period, then you will begin earning the rates earned by account holders without either Direct Deposit or Qualifying Deposits until you have Direct Deposit activity or $5,000 in Qualifying Deposits in a subsequent 30-Day Evaluation Period. For the avoidance of doubt, an account holder with both Direct Deposit activity and Qualifying Deposits will earn the rates earned by account holders with Direct Deposit.
Members without either Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, will earn 1.20% APY on savings balances (including Vaults) and 0.50% APY on checking balances.
Interest rates are variable and subject to change at any time. These rates are current as of 12/3/24. There is no minimum balance requirement. Additional information can be found at https://www.sofi.com/legal/banking-rate-sheet.
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.
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.
