Happy Money Data Reveals Paying Off Credit Card Debt Should be the Top Financial Goal for 2024

News provided by

Jan 16, 2024, 08:15 ET

Individuals Who Reduce or Eliminate Credit Card Debt Report Being Happier Than Others Across All Demographics

TORRANCE, Calif., Jan. 16, 2024 /PRNewswire/ -- Happy Money, a leading platform for unsecured lending in partnership with credit unions, shares proven strategies for increasing financial well-being as we recognize National Financial Wellness Month. To reduce financial stress and maximize your dollar, Happy Money advises consumers to evaluate spending habits, reduce credit card debt, and reinvest in savings.

Become a Savvy Spender

Happy Money's research indicates why paying off credit card debt should be consumers’ top financial goal for 2024. Americans with credit card debt now carry an average balance of nearly $7,000, which puts them at higher risk for increased financial stress. Experts from fintech Happy Money share data-backed strategies for evaluating spending habits, reducing credit card debt, and reinvesting in savings – during National Financial Wellness Month and year-round.

Overspenders report 44.3% higher levels of financial stress than savvy spenders, who spend less than they bring in each month, according to a Happy Money study.¹

"Positive cash flow is associated with countless financial and psychological benefits," said Dr. Chris Courtney, cognitive neuroscientist and Senior Vice President of Science, Risk, and Analytics at Happy Money. "It's important to spend less than you bring in each month and find your right balance between saving and spending."

To determine your savviest spends, take inventory of why you're spending and how it makes you feel. Becoming a savvy spender has many benefits, including a 98.5% increased likelihood of steering clear of revolving credit card balances.¹

Reduce Revolving Credit Card Debt

Happy Money data shows those with no credit card debt experience nearly 50% less financial stress than those with $5,000 or more in credit card debt.²Americans who do carry credit card debt have an average balance of nearly $7,000, according to LendingTree, so Dr. Courtney offers this advice.

"Put as much money toward the credit card that has the highest interest rate and make minimum payments on the rest until the highest interest card is paid off. Ignore balances and just focus on the highest interest card first. It is mathematically the right move," Dr. Courtney said. "Or if you qualify for a debt consolidation loan, that can help you pay less interest over time."

One such tool is Happy Money's Payoff Loan, which streamlines the process of paying off credit card debt with a single, fixed payment. Consumers can track their credit card debt in one place, eliminate the hassle of multiple payments, and boost their FICO score.

"Paying off credit card debt is an investment with a guaranteed positive return for your financial and mental wellness," said Adam Zarlengo, Chief Product Officer with Happy Money. "We have uniquely designed our loans to help you pay off debt and achieve your goals faster with smart features like direct credit card payoff, embedded insurance, and built-in guardrails to prevent over-extending beyond your cash flow."

Elevate Your Savings Game

While you're working on paying off credit card debt, it's vital to simultaneously kickstart savings habits for greater financial wellness. People who regularly contribute to savings accounts report 10% less financial stress than those who do not.³ And individuals with at least $400 in savings report 16.9% higher levels of life satisfaction than those without that amount saved.³

Consider opening a certificate of deposit with a local credit union to grow savings faster than with low-interest rates from traditional banks. For example, Happy Money credit union partner, Michigan State University Federal Credit Union, offers a 4.5% Annual Percentage Yield (APY) with a $500 minimum deposit, which pays higher dividends and puts savers way ahead of the national average savings rate of 0.61%.

"Investing in a CD allows you to create valuable savings habits that will empower you to reach your financial goals," said April Clobes, CEO of MSUFCU. "Creating a savings strategy will help you plan for your future and prepare for life events like purchasing a home, funding education, or creating an emergency fund. By depositing money and leaving it invested for a set period of time, you can safely jumpstart your savings journey with an account that does the work for you."

Now is the time for a fresh start at living financially well. By using these tools to reduce credit card debt and invest in your future, you can better achieve your goals this year.

Based on a survey of ~33K respondents, October 2020 to May 2021
Based on a survey of ~20K participants, May 2020 to August 2020
Based on a survey of ~60K participants, May 2020 to May 2021

About Happy Money
Happy Money is designing a happier way of lending that helps borrowers achieve their goals and helps credit unions achieve greater impact. Backed by leading investors, Happy Money has helped over 300,000 members since inception – working with community-focused lending partners to fund more than $6 billion in loans*. Learn more at happymoney.com.

*As of November 1, 2023

SOURCE Happy Money