Americans are carrying more credit card debt. Here’s how financial experts suggest tackling it – KPNX

Americans are carrying more credit card debt. Here’s how financial experts suggest tackling it – KPNX

NerdWallet found in it’s annual credit card study that the average American will pay $1,380 in interest alone this year, if interest rates don’t rise again.

PHOENIX — Higher prices on goods, incomes not rising to meet them and rising interest rates are part of what a new study said is leading to Americans carrying more credit card debt.

NerdWallet found in its annual credit card study that the average American will pay $1,380 in interest alone this year if interest rates don’t rise again.

Tough times

Getting calls for financial help isn’t new for Pastor Andre Miller’s New Beginnings Christian Church in Mesa.

But, lately, it’s the people he’s getting calls from that have changed.

“We’ve got a lot more calls from people who are actually working that need assistance,” Miller said.

Miller said these are people who have families to feed, with both parents working jobs but are still struggling to make ends meet.

“They’re coming up short on groceries; they're coming up short on utilities; they're coming up short on car notes. So people are just not being able to stretch like they used to,” Miller said.

As Miller has seen federal COVID relief funding running out, he’s noticed more people needing help amid inflation and rent increases.

“It's sad because we would love to help everybody. But we're just not able to do that,” Miller said.

Credit card debt rising

NerdWallet’s study found the amount of credit card debt people have in the United States has risen amid inflation and interest rate hikes by the Federal Reserve.

Michael Sullivan, with Take Charge America, a non-profit that offers financial counseling, said more people are calling lately in need of help.

While January is usually busier for Take Charge America after holiday spending, Sullivan notes, people are blaming high gas prices, as well as rent and food increases.

“We’re seeing folks now routinely having over 20% APR on a credit card,” Sullivan said.

Sullivan said the higher interest rates are affecting how quickly people can address credit card debt.

“It's very difficult to pay down the principal. So people are carrying those balances longer and longer. And everything is costing more and more. And it's more and more difficult for people to catch up,” Sullivan said.

"Sneakier way to get into debt"

However, it’s not just credit card debt Americans are taking on.

NerdWallet found nearly 1 in 5 Americans have used a buy now, pay later option in the last year.

Matt Vian, a financial advisor with Northsight Wealth Management, said it presents the same problem as credit cards.

“It’s still going to cost the price it's going to cost you,” Vian said. “And a lot of times, these places have high-interest rates as well.  So it’s a much sneakier way to get into debt.”

Pay high-interest credit cards first

To work on tackling debt, Sullivan recommends paying down high-interest credit cards first.

“You have to make minimum payments on every other bill you have. And try to find a few extra dollars, however many it is, to attack that highest-interest credit card and get it paid off quickly,” Sullivan said.

Vian also recommends writing down all debts owed to figure out what to tackle first.

“What your account balance is, what the amount of debt that you owe is, and then also the minimum payment that you have, and the interest rate,” Vian said.

“Write it all out to really take a look and assess, ‘What is my situation?’”

Hardships continue

Still, Sullivan is anticipating challenges ahead in 2023.

“I am afraid this is going to create another wave like we had during the last crunch back in the 2000s,” Sullivan said. “And I hope not; I hope that people can cut back on their spending and keep it in control.”

Still, Miller will be working to help those he can help in these tough times.

“It's going to take all of us those in the position of need, and those who are not in a position of need to put our heads together and figure out what can we do as a society to make things better for everybody, Miller said.