As America reaches a debt milestone of $1 trillion in credit card debt, consumers were hit with more bad news.
According to a Washington Post report, more than 25 million people are behind on their credit card, auto loan, or personal loan payments. When it comes to debt, the numbers are frightening.
More than 20 million Americans had overdue balances on their utility bills in January. It’s clear consumers are falling behind on paying for their basic needs.
So what’s next?
Matt Schulz from LendingTree said consumers have to get their financial house in order fast. Starting with credit card debt. Because interest rates are rising.
“Because as fast as it’s been rising for the past year and a half, it’s only likely to keep going up at least a little bit in the near term before it starts going down again. So that credit card debt that you may want to ignore and you may just not want to think about very much is only going to get more expensive if you don’t do anything about it,” said Schulz.
LendingTree’s recent study found that 80% of cardholders have had credit card debt at some point and 54% have it currently.
Also, that age does play a part. Gen Z is least likely to have credit card debt at 36% versus 60% for Gen X.
“So it’s a little bit of a different take on the it takes money to make money thing. You know, it kind of takes money in order to make debt. And that’s I think that’s a lot of what we’re seeing with the Gen Z thing. They simply may not have as much access to credit as certainly Gen Xers and boomers,” said Schulz.
There are a few ways to get that debt down while paying a much lower interest rate.
There are debt consolidation loans and the 0% balance transfer credit card. Experts said that’s the best way to go.
But you do need pretty good credit for a zero-balance transfer. So what if you don’t have good credit?
KIRO 7′s Jesse Jones said there are a lot of really good credit counseling agencies out there. His favorite is American Financial Solutions because they can work a credit card deal and your budget out at the same time. For more information go here or call them at 888-282-5492.
“That’s another form of debt consolidation where they can often negotiate something like a seven or 8% payback period over four or five years,” said Bankrate’s Ted Rossman. “What I think is especially useful here is that you don’t need great credit to qualify for that. And the terms are similar to what people with good credit would get on a personal loan.”