It turns out there is a force stronger than inflation and high interest rates — the calendar. The first quarter of the year remains undefeated: Since the New York Fed began issuing its Quarterly Report on Household Debt and Credit in 2003, credit card balances have never risen from the final three months of one year to the first three months of the next. Though balances were flat from Q4 2022 to Q1 2023, they fell on every other occasion including this year, when Americans’ collective credit card balances dipped 1 percent.

Still, there isn’t too much cause for celebration. Balances are still 13 percent higher than they were this time last year and 45 percent above where they were at the beginning of 2021. And while the first quarter usually brings some relief thanks to New Year’s resolutions to pay down debt, the arrival of tax refund money and a post-holiday spending dip, credit card balances usually increase modestly in the second and third quarters and then spike in the fourth quarter.

If you have credit card debt, paying it down should be toward the top of your household’s financial priority list. The average credit card rate is 20.66 percent, up from 16.34 percent just before the Fed started hiking rates in March 2022. If you have the average credit card balance ($6,360, according to TransUnion), and you only make minimum payments at 20.66 percent, you’ll be in debt for more than 18 years and will owe approximately $9,500 in interest.

What to do if you have credit card debt

If you have credit card debt, your primary objective should be to lower your interest rate. Forget about rewards for now — the two-thirds of credit card debtors who are chasing rewards are making a big mistake. It doesn’t make sense to pay 20, 25 or 30 percent in interest just to earn a few percentage points’ worth of cash back or travel rewards.

Don’t get me wrong, I love rewards, but only if you’re avoiding interest. Someone with credit card debt is much better off signing up for a credit card with a generous interest-free balance transfer promotion, some of which last up to 21 months.

I think the best way to take advantage is to refrain from adding new purchases, even if they’re interest-free for a while. Divide what you owe by the number of months in your 0 percent introductory APR term and try to stick with that level payment plan. That gives you the best odds of success. The interest rate will go way up once the promotional term ends, so if at all possible, pay in full before the clock expires.

The balance transfer approach works best if you have a good to excellent credit score and no more than five or six thousand dollars in credit card debt. If you have a lower credit score or a higher debt load, you should probably consider working with a reputable nonprofit credit counseling agency instead.

Reputable organizations such as Money Management International negotiate debt management plans and are often able to offer something like a 7 or 8 percent rate over four or five years. It’s not zero, but it’s a longer term, you don’t need great credit to arrange it and their counselors will provide a ton of helpful advice along the way.

I’m also a big fan of looking for ways to up your income and cut your expenses to turbocharge your debt payoff journey. Take on a side hustle, sell stuff you don’t need, cancel little-used subscriptions and so forth. You don’t need to do these things forever, but if you buckle down and make credit card debt payoff a priority, you can make major progress in as little as about six months in many cases.

The bottom line

Even though Americans’ credit card balances fell a little bit last quarter, credit card debt remains a significant challenge for many households. The good news is that there are plenty of things you can do to reduce your share. Don’t feel ashamed — many people have credit card debt, and it’s often caused by very practical reasons such as emergency expenses and day-to-day costs outpacing your income.

But the issue won’t go away on its own, so get that balance transfer card, pursue that side hustle or come up with another plan to pay down your credit card debt as quickly as possible. Credit card balances and rates are likely to remain elevated for the foreseeable future.

Have a question about credit cards? E-mail me at and I’d be happy to help.