The New York Federal Reserve Bank is expected to release data on Monday that shows that credit card debt in the United States has reached a record high of $1 trillion. This is a major reversal from just three years ago, when households were rapidly paying off their credit card debt with the stimulus payments they received during the COVID-19 pandemic.
The rise in credit card debt is particularly concerning because interest rates are at an all-time high. The average credit card annual percentage rate (APR) hit a new record of 20.33% last week, according to a Bankrate database. This means that it is now more expensive than ever to carry a balance on your credit card.
The rising cost of living is also a major factor in the increase in credit card debt. Inflation is at a 40-year high, and this is making it more difficult for people to afford basic necessities. As a result, many people are turning to credit cards to cover their expenses.
The high levels of credit card debt are a major concern for economists and policymakers. They worry that this debt could lead to a financial crisis if it is not addressed. There are a number of things that people can do to reduce their credit card debt, such as making more than the minimum payments, negotiating with their creditors, and consolidating their debt into a single loan. However, the rising cost of living and high interest rates make it difficult for many people to make progress on their debt.
It is important to remember that you are not alone. Millions of Americans are struggling with credit card debt. With the right help, you can get out of debt and build a brighter financial future.
It is time to budget
It is time to budget!
According to a recent survey by the National Foundation for Credit Counseling, only 41% of Americans maintain a budget. This means that the majority of Americans do not have a plan for their money.
There are a number of reasons why people do not maintain a budget. Some people simply do not think it is necessary, while others find it to be too time-consuming or difficult. However, there are a number of benefits to maintaining a budget, including:
- Increased financial awareness
- Reduced debt
- Improved savings
- Increased peace of mind
If you are not currently maintaining a budget, I encourage you to give it a try. It may seem daunting at first, but it is a valuable tool that can help you to take control of your finances.
Here are a few tips for creating and maintaining a budget:
- Start by tracking your spending for a month or two. This will give you a good idea of where your money is going.
- Once you have a good understanding of your spending, create a budget that outlines your income and expenses.
- Be realistic about your budget.
- Review your budget regularly and make adjustments as needed.
Maintaining a budget takes time and effort, but it is worth it in the long run. A budget can help you to reach your financial goals and improve your overall financial health.
There are many great budgeting apps. I recommend Mint. Mint is a completely free budgeting app with all the essential features. There are ads. The other budgeting software and apps out there typical require you to pay subscription fees, which seems counter productive as you are trying to eliminate monthly expenses – not add to them.