Younger generations have the majority of their lives ahead of them, but there is also a lot still holding them back. Between student loans, car loans, and credit cards, this generation has plenty to pay back before they can move forwar
According to Experian’s’ Generational Credit Trends Report, Americans age 19-29 may have the lowest number of bank cards and average credit card balances, but they more than make up for this with student loan and auto loan debt.
With an average student loan balance of $21,400and a total average debt balance of $34,765, it can be difficult to worry about saving for the future when you’re still paying for the past. And while there is still much debate over what is more important when it comes to saving for retirement: steadily increasing your nest egg or paying off debts; one thing is for certain, you should pay off all your credit card debt as soon as possible to avoid continually paying high-interest rates and fees.
The average 19-29 year-old has $2,682 in credit card debt, an amount that only seems to increase with age. This age group has the highest utilization of bankcards, the lowest credit scores and is slow to make credit card payments. Late payments can amount for a lot of wasted money between interest and fees. Also, revolving debts such as credit cards have a more negative impact on your credit score than installment debts. Student loans and automobile loans may make up a larger portion of your debt, but they also typically have lower interest rates than credit cards. These loans are also typically fixed amounts that need to be paid-down, while credit card debt can easily increase overnight with the unconscious swipe of a card – something younger people will do often.
While it may seem better to charge now and pay later, you could easily end up spending twice as much on credit card bills and interest overtime. By paying off your credit cards followed by installment debt, you can avoid wasting money on high interest rates and will have more money available to pay for future dreams, for you and your family, debt-free. If you or someone you know needs help balancing debt reduction with saving for the future, contact our office today for a consultation or review.
The above material was prepared by Securities America, Inc.