How Black Americans Can Proactively Help Erase Credit Card Debt and Stay Out Of It

Black Americans are 30% more inclined to own just one credit card instead of spending money on multiple credit cards, new data shows.

The discovery is part of evidence that reveals Black Americans are more mindful about using their credit cards than the average American.

However, those revelations only tell part of the story. On average, Black Americans pay out $1,734 on their credit cards monthly, higher than $1,527 for white Americans, and $1,290 for Hispanic Americans. The data is among figures provided by Matt Brannon, author of the 2022 credit card debt study.

Brannon’s analysis is critical, given there are some 200 million U.S. card holders relying on the plastic to build credit and afford making basic daily purchases. Talks of a recession and economic instability could soon have the 66% of those surveyed with no credit card debt dropping behind on card payments.

Other findings disclosed that 44% of Black Americans have credit card debt, closer to the average American at 46%. Yet, dollar wise, Black Americans at $4,765 have less credit card debt than the average American of $6,093.

Though Blacks have smaller credit card debt, they have fewer assets to help negate the bill. Consider, the homeownership rate for Black Americans is around 43% versus 72% for white Americans. Furthermore, Blacks were 21% more likely than the average American to rely on credit cards to cover essential living expenses.

Brannon pointed out that 2022 has been exceptionally difficult for Black Americans, who appear to be disproportionately impacted by the economic downturn. Some 18% of Blacks went into credit card debt compared to 13% of all Americans. Higher prices fueled by inflation and more Black Americans turning to credit cards to pay bills could be fueling the disparity. The lingering pandemic hasn’t helped.

“Black Americans who have experienced credit card debt were 62% more likely than Americans overall to say COVID-19 contributed to them being in credit card debt,” Brannon says.

The uplifting news is that you can be proactive in reducing or erasing money owed. Here are some tips Brannon provided to help cancel debt:

Track your purchases: Use debit cards and cash instead of credit cards when possible.
Create a budget and stick to it. Check out how this woman successfully escaped weighty credit card debt partly by using careful budgeting.
Commit to a debt-reduction strategy: One strategy, the “avalanche method,” prioritizes paying off high-interest debts first. It suggests that can save you a lot of money on interest payments in the long run. Another strategy, the “snowball method,” prioritizes paying off debt with the lowest balance and gradually moving toward debts with larger balances.
Balance transfer: Once you are positioned to commit to debt reduction, you can initiate a balance transfer. Do that by moving debt to a different card that offers lower introductory interest rates.
Negotiate your debt: Some credit card companies offer hardship plans or will lower your interest rates if you agree to participate in a plan to reduce your debt.

To help stay out of debt, Brannon offered more tips like setting reminders or using auto payment options, so you never pay a late fee. He suggested paying at least the minimum monthly payment to avoid fees and to pay extra when financially possible. He noted some experts suggest using debit cards for small purchases under $50 and credit cards for larger ones.

“Staying out of debt is more important than accumulating rewards that come with credit card points.”

Observers also recommended being open to sites that can potentially help enhance your overall financial health. For instance, sites like this one and another here might prove beneficial.