Record Personal Debt
written by Mike Ballew October 1, 2023

Consumers are turning to credit cards in record numbers. According to TransUnion, unsecured personal debt increased 21% over last year and credit card debt is at an all-time high of $1 trillion. With pandemic aid drying up and the resumption of student loan payments, consumers are relying on credit cards to maintain their lifestyle.

Debt-Consolidation Loans

What recourse do consumers have when their credit cards are maxed out? Debt-consolidation loans allow you to transfer high-interest credit card debt to lower-interest personal loans. Interest rates on credit cards have surpassed 20%, making 10% debt-consolidation loans look attractive.

Endless Cycle

Transferring credit card debt to personal loans can be an effective strategy, but only if spending is curtailed. Researchers from LendingTree found that 18 months later most people who use personal loans to pay down credit card debt are worse off. The debt-consolidation loan has put them deeper into debt.

According to TransUnion, borrowers who use personal loans to consolidate credit card debt reduce their balances an average of 57%, but start piling on more debt just three months later. The data underscores a growing trend of consumers falling deeper into debt as delinquency rates tick up.

The Right Stuff

In our orbit of friends is a 70-year-old veteran who works hard at keeping himself in shape. Recently as plans were being made for a luncheon, he announced he wouldn’t be having anything. When pressed for details, he explained that he weighs himself each morning and based on that morning’s reading he wasn’t allowed to eat today. That’s discipline.

The right way to use credit cards is to pay them off each month. Maybe when you’re young and just starting out you can justify carrying a small balance, but once you are established there is no excuse. Accumulating credit card debt is a clear indication that you are living beyond your means. Limit total spending to 80% of your take-home pay with the balance going toward savings.


It takes discipline to live within your means and pay off your credit cards each month. It takes even more discipline to cut spending to the degree necessary to pay down existing debt.

Don’t get in over your head with credit cards. Owing money to credit card companies plays right into their hands. That's how they get you. Live beneath your means and be a saver. Don’t spend money you don’t have to impress people you don’t know.

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Eggstack founder, Financial Planning Association member, engineer, and software developer.