According to consumer credit data from the Federal Reserve, Americans now have a total credit debt exceeding $1 trillion. Bruce McClary, a representative from the National Foundation for Credit Counseling, highlights the challenges faced by individuals with average credit, who are burdened with credit card interest rates ranging from low to mid-20%. McClary warns that the mounting debt and high cost of living could lead to financial difficulties in the coming months.
McClary points out that people increasingly rely on credit cards to cover essential expenses like groceries, as the cost of living continues to rise. Although inflation has slowed, prices for many items remain higher than pre-pandemic levels. McClary emphasizes that incomes have not kept pace with the increased cost of living, creating a strain on individuals’ budgets.
As the bills from holiday spending come due, McClary anticipates that many people will struggle to make more than the minimum payment or even meet the minimum requirement. To address this issue, he suggests exploring options to transfer credit card balances to lower interest rates, particularly for those with good credit scores. Additionally, McClary advises individuals with poor credit or those falling behind on payments to seek assistance from nonprofit credit counseling agencies, such as nfcc.org. These agencies can provide guidance on managing debt, finding affordable repayment solutions, and improving overall financial situations.
McClary concludes by encouraging individuals, even those not currently facing financial difficulties, to consult with credit counselors to explore ways to improve their debt situations. Taking proactive steps now can help individuals better manage their finances and avoid potential challenges in the future.