With credit card interest rates tipping the scales at a whopping 24.61%, it’s no surprise the credit card debt among young adults is soaring—but what may come as a surprise is that it’s actually Generation X that carries the most credit card debt.
According to a new report from New York Life, Americans in Generation X, which refers to people born between 1965-1980, have an average of $7,004 in credit card debt, compared to Baby Boomers ($6,785), Millennials ($5,928), and Gen Zers ($2,876).
Looking at this breakdown of average credit card debt by generation begs the question: what’s with the credit card debt by Gen X?
Most experts agree: Gen X carries the lion’s share of credit card debt because they also carry the lion’s share of the generational responsibility, sandwiched as they are between caring for older parents and still dependent children, many of whom are in college or university.
Having a hefty balance on a credit card with a high APR can make it feel impossible to get ahead, but tackling credit card debt by Gen X isn’t a lost cause.
“Gen Xers are the ultimate financial jugglers,” agrees ConsumerCoverage’s CMO and financal literacy expert, Adrian Lee. “They balance the responsibilities of caring for aging parents while also supporting children in college. It’s no surprise that they carry the most credit card debt—but their resilience and resourcefulness in managing it all is truly commendable and we need to give credit where credit is due to the unsung heroes of the sandwich generation. We also need to make sure they’re aware of their options for getting a handle on their finances.”
One of the easiest ways for Gen X—or any generation—to pay off credit card debt is with a credit card. Fight fire with fire, as it were.
How? By using a 0% balance transfer credit card to pay off your higher-interest credit card. But you have to be careful, or you could end up in a vicious circle.
Here’s what we mean.
0% balance transfer credit cards can be an incredible tool to help you pay off debt on higher interest cards, but you need to act wisely—and your credit will need to be decent to qualify for one of these cards.
0% balance transfer cards allow you to transfer the balance of your higher rate card onto the new card, interest-free, for a preset period of time (usually around 21 months). The thing is, once this time period is up, full interest kicks in, and any balance that isn’t paid off is subject to that rate.
What’s more, there’s often a balance transfer fee (usually 3-5% of the total balance), and, if you use the 0% card for new purchases, you may be charged the higher rate for those purchases. Even if the card affords you the 0% interest offer, making purchases on the card defeats the purpose of the card: to pay off your debt.
Instead, you’re making it so you’re more likely to have a balance on the card when the promotional period is over.
Here’s what we recommend: make note of how many months you have to pay off your debt at 0%. Divide the amount of debt you have by that many months and if possible, pay off that amount every month.
Example: You have $5,000 in credit card debt, and 21 months to pay it off on your 0% balance transfer card. Let’s say the balance transfer fee is 5%.
$5,000 x 5% (balance transfer fee) / 21 months = $250, which is the amount you’d have to put onto your card every month. (And don’t be late with your payments because that can negate the 0% interest offer.)
If you can’t manage to pay off the card in the preset time, you could apply for another 0% balance transfer card and repeat.
Keep in mind, applying for credit cards can hurt your credit score, lowering your points by 5 or less. The good news is the impact from applying is temporary, your score rebounding in a few months. However, if you keep getting new cards, then you may not have time to rebound and the negative implications for your credit score can add up. So don’t get more cards than you absolutely need.
It doesn’t matter what generation you’re in: you can use any of these methods to help you pay off debt.
In addition to the 0% balance transfer card, you can also pay off the credit card with the highest interest rate first, which will help you save money down the road.
If your credit is good, you may also be able to apply for a low interest personal loan, which usually have interest rates of around 7%.
Across the board, credit card debt is up, with 46% Americans carrying balances month-to-month—up from 39% last year according to a Bankrate survey. Combine this with the fact inflation is at a 40-year high and there’s no doubt that getting ahead is more difficult for many than ever. This is why we’re not saying using the strategies outlined here will solve all your problems, but they can definitely help.
Get our top picks for 0% balance transfer credit cards here.
Hollay Ghadery Hollay Ghadery is a writer and editor who is passionate about financial literacy as a means to personal fulfillment. Hollay has over 18 years of experience creating content about a range of topics related to personal finance, including insurance, investing, banking, and credit cards. When Hollay isn't writing, she's spending time with her four children, two dogs, and three goats.
