The credit card bill has increasingly become a burden for many people. In the United States, the number of consumers paying only the monthly minimum has reached its highest level in the past 12 years, according to the Federal Reserve Bank of Philadelphia.
This means that more people are spending on their credit cards but paying off less, causing debt to grow month by month and interest to accumulate.
Additionally, late payments on credit card bills are on the rise, which can lead to the creation of a financial snowball effect.
The Trap of High Interest Rates
Another factor complicating the situation is the rise in interest rates. By the end of 2024, the average credit card interest rate exceeded 21%, well above the 15% recorded in 2019. As a result, those carrying debt from one month to the next end up paying more and more, making it even more challenging to pay off the bill.
For this reason, February may be a good time to organize your finances. After the seemingly endless holiday expenses, many people start looking for ways to get their finances back on track, whether by reducing expenses or adopting financial challenges such as Frugal February or the No-Spend Challenge.
Understanding More About Frugal February
This time of year means that eating at restaurants or ordering delivery is out of fashion, and saving money by eating good old home-cooked meals is in.
According to personal finance experts, one of the main reasons for adopting this challenge is that consumers tend to overspend during the December holidays and need a “breather” to recover their finances.
But why February? This month works well for a “financial reset” for many reasons. Since February is a short month, with only 28 days, the feeling of deprivation is relatively brief. Additionally, in many parts of the country, the cold weather naturally encourages people to stay home.
Transferring Debt Can Help, But It’s Not Magic
One option many consumers consider is transferring their balance to a card with lower interest rates. This can be helpful if well planned. But before taking this route, it’s important to understand the spending habits that led to the initial debt.
To identify where your money is going, I suggest analyzing your expenses over the past 12 months. Many banks allow you to export transactions into a spreadsheet, which can make it much easier to identify patterns.
Small Habits, Big Impact
If there’s one thing I’ve learned over the years, it’s that debt doesn’t always come from big purchases. More often, it’s small daily expenses that add up.
For example, you stop to fill up your car and end up buying a snack, a soda, a chocolate bar, or even a lottery ticket.
These small expenses may go unnoticed but make a big difference when it’s time to balance your budget.
Just being aware of this pattern can help reduce unnecessary expenses and direct more money toward paying off debt or building an emergency fund.
Financial Challenges to Regain Control
For those looking for extra motivation, the Frugal February challenge I mentioned earlier can be a great strategy.
The idea is to avoid impulse purchases and cut unnecessary expenses for a month, redirecting the money toward debt repayment and savings.
Another trend gaining traction, especially on TikTok, is the No-Spend Challenge. The goal of this challenge is to commit to spending only on essentials for a specific period—it could be a weekend, a week, or even an entire month.
I can personally say that I’ve tested this challenge with my boyfriend when we first moved in together. The result? We managed to pay off some debts and even get ahead on a few bills. However, I must warn you that relying solely on willpower is not a sustainable long-term solution.
That’s why creating a spending strategy is usually more effective than simply cutting expenses for a short period.
So, Is It Worth Transferring Your Credit Card Balance?
If you have a good credit history, transferring your debt to a card that offers a lower interest rate or a 0% promotional rate can be an interesting option—as long as you can pay off the balance within the promotional period.
However, most balance transfers charge a fee of 3% to 5% of the transferred amount. So, for a $1,000 debt, this could mean an extra cost of $30 to $50.
In other words, balance transfer can be a financial solution, but it should not be seen as a miracle fix—otherwise, it could turn into a trap.
The most important thing is to adopt healthier financial habits to avoid accumulating new debts in the future. After all, moving debt around doesn’t mean eliminating it, and without good planning, the problem will just repeat itself—but now on another card.
Conclusion
If you’re dealing with credit card debt, the first step is to understand where your money is going and identify spending patterns that may be harming your finances.
If you don’t feel confident doing this alone, a great tip is to reach out to a nonprofit credit counseling agency, which can help negotiate much lower interest rates on credit card debt in exchange for a structured repayment plan over several years.
To find a reliable credit counseling agency, you can search online through the National Foundation for Credit Counseling.
Small adjustments in financial habits can make a big difference and ensure that the next year—or even the next month—starts with less debt and more financial peace of mind.
