Credit Card Debt Just Hit a Record $1.14 Trillion. Here's One Way to Pay Off Your Balance Faster

Credit cards offer consumers lots of perks these days, like cash back and travel rewards. But there's growing evidence that Americans are dealing with a significant credit card debt problem.​​

The latest data from the Federal Reserve Bank of New York shows credit card debt increased by $27 billion in the second quarter of this year, up 5.8%. The increase puts Americans' credit card debt at a record $1.14 trillion.

And it's not just the high amount that Americans collectively owe; it's also getting harder for consumers to pay their balances because of the high interest rates many cards charge. Here's what's happening and one possible solution.

High balances aren't the only problem

An estimated 50% of Americans carry a monthly credit card balance. That's not great news and it's even worse when you consider that credit card delinquency rates are increasing, especially among younger consumers.

Two years of rising inflation has damaged many Americans' budgets, and while it's cooled down recently, many expenses -- from grocery prices to home goods -- are more expensive than just a few years ago.

But inflation doesn't paint the whole picture. Credit card interest rates have soared over the past couple of years to 21.5%, and the average card balance has increased to $6,329.

High interest rates make it much harder for many consumers to pay their balance. For example, here's how much you'd pay in interest if you have the average credit card balance of $6,329 and pay an annual percentage rate (APR) of 21.5%:

With credit card interest rates so high, many Americans could easily spend thousands in interest when paying off the average credit card balance.

One way to pay less in credit card interest

If you're having trouble keeping up with credit card payments, one option that can help is to transfer your balance to a card that offers a 0% introductory interest rate.

These balance transfer cards can help you pay down your balance faster and with less interest if you use them correctly. It's worth noting that many balance transfer cards charge a one-time transfer fee of 3% to 5% of the balance.

Let's assume you have a credit card balance of $6,329 and pay 3% to transfer it to a card with a 21-month 0% introductory APR. With the fee, your balance would total about $6,582.

If you pay $315 per month toward the balance, your credit card debt will be paid off within 21 months, and you'll pay $0 in interest. But if you keep the original balance of $6,329 on a card with a 21.5% APR and pay down the balance over 21 months, you'll spend $1,321 in interest!

Balance transfer cards can be the right solution for some people needing immediate relief from a high APR. Just be careful not to add more debt to your balance transfer card. Instead, create a debt payoff plan that focuses on aggressively tackling your credit card balance every month while you have the introductory low rate.