There’s a new member of the Trillion Dollar Club.
No, I’m not talking about a business mogul, genius investor or member of a royal family. It’s credit card debt: According to the latest figures from the Federal Reserve, Americans’ credit card balances now surpass $1 trillion, joining the ranks of student loans and auto loans.
This is also the highest America’s total credit card debt has been since January 2009, when the country was in a recession. Although rising borrowing is often seen as a sign that the economy is growing stronger (because it shows people are willing to spend), there are some troubling insights from the data — namely, that missed credit card payments are on the rise, reports the Wall Street Journal.
If this news has you a little nervous about your own credit card debt, fear not. Here are three quick tips to help keep your plastic from putting you into the poorhouse.
Avoid late fees at all costs. In other words, always pay your bill on time. Set a calendar reminder if you have to — or you may end up tacking anywhere from $10 to $49 onto your balance.
Don’t be afraid to ask for a lower annual percentage rate. If you think a stellar credit score or a strong history of making on-time payments warrants a lower rate than the one you’re getting, call your credit card company to see if they can put a better deal on the table. It never hurts to ask! (And here are a couple other things you should consider asking for while you’re on the phone.)
Tackle cards with the highest interest rate first. If you’ve got balances on multiple cards, focus on paying down the ones with the highest interest rates first. (That means paying more than the minimum due on those higher interest rate cards while continuing to pay the minimum on the lower interest rate cards.)
If you have a small balance on a card that you can pay off in one or two months, however, you could pay that card off first if you think you need to give yourself a nice little motivational boost to tackle bigger debts.
Stop using your credit card to pay for financial emergencies. Unexpected expenses like a broken headlight or chipped tooth are typically big-ticket items that can cause your credit card debt to rack up quickly. These types of emergency costs are best left for, you guessed it, an emergency fund.