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As a general rule, it’s a good idea to keep your credit card debt to a minimum, regardless of your age. But if you’re in your 50s, it’s really important to whittle down any existing credit card debt you have.
Why? At this stage of life, you may only have about another decade left in the workforce until you’re set to retire. And if your retirement savings could use a boost, you’ll want the option to pump as much money into your IRA or 401(k) as possible. But the more credit card debt you have, the more money you’ll spend on monthly payments — and the more you’ll waste on interest.
How much credit card debt do 50-somethings have?
People in their 50s have more credit card debt than their older counterparts in their 60s and 70s. They also have more credit card debt than those in their 20s and 30s.
The average credit card balance among 50-somethings is $9,250, according to Personal Capital. That’s comparable to the average balance among people in their 40s — $9,379.
Now at first, it may seem surprising to see that people in their 40s and 50s have so much debt. But also, people of that age may have more expenses than younger people — things like college tuition bills or costly mortgage payments to keep up with.
How to pay off credit card debt efficiently
It’s a good idea to get rid of your credit card debt no matter what decade of life you’ve reached. But if you’re hoping to use your remaining working years to filter more money into your retirement savings plan, then it’s especially important that you work on shedding your credit card debt as quickly as possible.
To that end, you have options. One is to do a balance transfer, which, as the name suggests, lets you transfer the balances you have on your existing cards to a new credit card with a lower interest rate on it. You may even manage to snag a 0% introductory rate offer on your balance transfer. Granted, that 0% rate may not last longer than a year or 18 months, but it still buys you a decent reprieve on accruing more interest on your debt.
You can also look at getting a personal loan. These loans let you borrow money for any reason, so you can take one out, use your proceeds to pay off your credit cards, and then repay that loan at what will most likely be a much lower interest rate. Plus, with a personal loan, you can lock in a fixed interest rate on your debt, as opposed to sticking with credit card balances and running the risk that your interest rate will climb over time.
One major benefit to reaching your 50s is getting to make catch-up contributions to an IRA or 401(k). Those catch-ups are worth $1,000 and $6,500, respectively. But to take advantage of that option, you’ll need to free up cash. And shedding credit card debt is a great way to make that happen.
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