Rise in American credit card debt ahead of the holidays
QUINCY (WGEM) - The holiday season’s just around the corner, but if you are getting ready for some holiday shopping, you’ll want to keep an eye on your budget. According to the New York Federal Reserve, American’s total credit card debt has hit nearly $1 trillion.
Kim Harden, a branch manager at United Community Credit Union said they’ve seen clients locally come in with credit card debt ranging from thousands, to even tens of thousands of dollars.
Harden said inflation has forced many people to use their credit cards to supplement their income. She said the increased prices of food, gas, and other items have also eaten away at peoples savings. She said it’s hard for people who amass a lot of debt to pay it off. She said depending on the interest and amount of debt, the minimum payment might barely make a dent.
“Each month, you make a few charges, your vehicle has some trouble and instead of being able to pay off that thousand dollars at the end of the month, you are only able to pay a part of that so that balance transfers over to the next month,” Harden said.
Harden said 64% of Americans are living paycheck too paycheck. She said it causes extra stress for families, as it can take them years to pay off the debt.
Lonnie Nelson is a professor of philosophy at Hannibal-LaGrange University has said the other problem is American’s wages haven’t kept up with the rising inflation. Combine that with higher interest rates, for those with credit card debt, it makes it very difficult for American’s to pay off their debt.
He said with the holiday season coming around, there’s risk for more Americans to pile on even more debt while doing their holiday shopping.
“Because there’s so many good deals we think we are saving a lot of money. I can spend $2,000 that I don’t have, and ‘oh look I saved $700 on the deals I bought with my $2000 expenditures’. But now I’m $2,000 deeper in debt with interest on top of that,” Nelson said.
He said for people either concerned about amassing credit card debt or who have it, they should seek the help of a financial advisor. If one is too expensive, he recommends finding books on financial planning and budgeting to understand how to create a plan on paying off your debt and budgeting. He said you can even reach out to your local church or look for community groups who offer financial planning and advice for free. Another tip he gave is to go to your bank or credit union and get your credit card debt into a bank loan. He said banks have much lower interest rates and they can set up a good payment plan that can work to get your debt paid off in a less stressful way.
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