It is no surprise that American families are paying a growing debt bill with shrinking wages, leaving little room for saving. The new Survey of Consumer Finances from the Federal Reserve gives a concerning snapshot of the finances of average American family with growing debt and shrinking savings.

According to the survey, 46.2% of all families now carry a credit card balance. This is up from 44.4% in 2001. Households are also carrying higher balances; the mean balance is now $5,100 ($4,400 in 2001) and the median balance is $2,200 ($2,000 in 2001). The median income is currently $43,200 and the typical family's credit card balance is now almost 5% of their annual income.

"These households have probably gone through budget shock--as their balances have risen, the interest rates have also increased every few months and the minimum payment percentage has just increased," says Bill Hardekopf, CEO of Lowcards.com. "The average APR is now above 13%, so carrying that balance is getting very expensive. The average household is paying over $700 per year in interest for credit cards."

Reducing or eliminating credit card debt should be a priority for families who want to move beyond financial survival. The first step should be contacting the credit card companies and requesting a lower rate, especially if you have a good payment history but your rate is higher than 13%. This is a simple suggestion, but it works. Even if the rate is lowered only 2%, this extra money can be used to pay down the balance. If the credit card company turns down the first request, be persistent and call again in a month or two.

Another option is transferring your balance to a card with a lower interest rate. "If you expect to receive a tax refund or a bonus in the next year, transfer your balance to a card with 0% APR on balance transfers for 12 months. Extra money from tax refunds, gifts and bonuses can help significantly in paying down the balance," says Hardekopf.

Paying more than the minimum balance due, even an additional $20 per month, makes a big difference in paying down credit card debt. Paying off a $2,200 balance with a 13% APR and $55 minimum payment will take over 14 years and an additional $1,500 in interest. Increase the monthly payment to $75 and it will take only 36 months (3 years) to pay off the card and only $461 in interest.

Almost 25% of US households say their spending is now less than or equal to their income. "Many families are frustrated and overwhelmed by working hard only to see their debt grow instead of their savings," says Hardekopf. "This is a large group of people who are one late payment away from receiving punitive default rates of almost 30% on credit cards and other loans. If you are at the edge, default rates will be devastating. If your credit card bill comes at the end of the month when there is no money left, contact your credit card company to change your billing schedule to fit with your pay schedule."

The survey is not a discouraging picture for all families. While 74.9% of all families have a credit card, 42% of this group pays off their card each month. In most of these cases, the interest rate does not matter. This is a large group of people that will benefit from having a reward card like Blue from American Express that provides the widest variety of reward options available with no limit to the points earned.

«Every person who pays off their credit card in full each month should be using a credit card that gives a rebate or a reward,» says Hardekopf. «Otherwise, you are being economically foolish. Some of these cards pay you a significant cash rebate just for using the card.»

LowCards.com ( http://www.lowcards.com ) is an independent website that helps consumers easily compare credit cards in a variety of categories such as lowest rates, rewards/rebates, and lowest intro rates. It also gives and unbiased ranking and review for each card. Created by Hampton & Associates, the company has been analyzing the credit card industry and supplying objective websites on various consumer expenses for over five years.

For more information, contact Bill Hardekopf at 1-800-388-1910 or email protected from spam bots.

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Bill Hardekopf

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Source: emediawire