WTKR Norfolk: Advice as credit card debt reaches $1 trillion
MMI's Thomas Nitzsche joins Erin Miller at WTKR Norfolk to discuss elevated demand for credit counseling as credit card balances and interest rates continue to rise.
Transcript:
Inform. Investigate. Inspire. This is NEWS3 this morning. It is 6:08 now. Millions of people in this country are swimming in credit card debt. Ahead in my problem solvers report we're going to have a look at the resources that are available to help you become debt free.
6:16 now. All across the country our finances really being stretched thin. A lot of people using credit cards more.
Yeah Blaine, so much so that the credit card total debt in this country has now hit a record $1 trillion, and this is the first time that that's ever happened by the way. So I wanted to know how high the interest rates are now, the legislation that's on the table to cap them, and the resources available to help the average person become debt-free. Before you swipe your credit card, consider if the purchase is worth it. Now consider if it's worth paying more than the price tag.
“As the interest rates get higher and higher it becomes harder and harder to pay down that debt.”
A new report by Lending Tree says the average credit card interest rate is close to 24.5%. That's enticing more people to get help.
“So far this year we're up about 45% in counseling volume versus the same timeframe last year.” Thomas Nitzsche is a financial educator at Money Management International, a nonprofit that gives customers free credit counseling.
“I understand that you were referred to us by your creditor. what's going on?”
He says before a person typically reaches out they have about $26,000 worth of credit card debt.
When people have reached out what are they specifically pointing to as the reason that maybe they've gotten this far in debt?
“I think between medical and just general cost of living is the reason we're seeing more people turn towards credit cards. And then it becomes harder to pay them down as those balances get higher and higher and the interest rate gets higher and higher."
He says MMI credit counselors often help clients go from near 30% interest to single digits. And there are several different avenues to take depending on your financial situation. The conversation also sparking debate in Congress. A senator from Missouri [is] introducing legislation to cap credit card interest rates at 18%.
“If they were to reduce the average interest rate from 22% to an 18% that's obviously great for people who are carrying a balance now and who already have an account, but the concern would be that it would squeeze folks on the lower end of the credit spectrum out of having a card at all.”
I'll keep you posted on any movement with that bill, but now let's talk about actionable solutions.
First understand your budget and see where you can cut back. Then ask your lenders if they’ll give you a lower rate. Consider consolidating your credit card debt that's when you concentrate your debt payments into one bill. If you consolidate by using a personal loan you can use the money from the loan to pay off the debt. You may save on interest rates and boost your credit score.
And remember you can always reach out to a credit counselor for advice, but if you have a consumer tip or you might be over in over your head with debt right now you can also reach out to the news through Problem Solvers. Email us at problemsolvers@wtkr.com.
