Crushing inflation is leading millions of Americans to rely more heavily on their credit cards, leading to an explosion in accumulated debt.
KGVO News contacted Wallet Hub Legal and financial analyst Jill Gonzalez on Monday for the update.
“Right now, American consumers have started to fall back into bad credit card debt habits,” Gonzalez said. “We saw a record reduction at the start of the pandemic in 2020, but in 2021 we saw things slip away from us, and I think we’re going to continue to see that as we move forward with 2022 as well. Right now we’re seeing an increase of about $75 billion quarter over quarter.
Gonzalez said American families are rapidly sinking into deeper credit card debt.
“Right now it looks like the average household credit card balance is around $9,000, and that’s getting closer to that predicted breaking point that we’ve seen in the past that basically means a recession. “, she said. “There is most likely a recession imminent, probably in the fourth quarter (the fourth quarter) of this year, so it is time to really get things under control.
Gonzalez said that despite the financial difficulties, the time has come to create some kind of emergency fund.
“Besides the obvious things like making a budget and sticking to it, now is the time to build an emergency fund,” he said. “We’ve seen what happens when you don’t have one during the recession. You really want that cash safety net to fall back on you because then you won’t be as likely to fall behind on your bills in the event of emergency expenses or unexpected unemployment that we’ve seen basically over the past two last years.
Gonzalez said her organization has resources to help families in their efforts to reduce credit card debt.
“There are credit card debt calculators out there that can do the job for you,” she said. “You put in how many credit cards you have, what your balance is on each and what your interest rate is on each and it can spit out what your monthly payment should be on each of those credit cards. is really the easiest way to have at least one goal and try to achieve and stick to it. credit card calculators so you can use it for free.
For example, you need to make monthly payments of $295 to pay off your credit card balance of $6,000 in 24 months. Your total interest charges will be $1,088. This assumes that you do not incur any additional charges during this period.
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