BUFFALO, NY (WKBW) — Americans are grappling with credit card debt, which recently grew at its fastest rate in more than two decades.
This comes at a time when interest rates are expected to rise.
By the end of 2021, credit card balances grew from $52 billion to $860 billion nationwide, according to Federal Reserve Bank of New York.
Noelle Carter, president and CEO of consumer credit counseling service Buffalo, said that ideally, carrying over balances on credit cards is strongly discouraged.
“People should definitely take a look and start logging their regular monthly income and expenses to understand their actual disposable income. Ideally, we wouldn’t have credit card balances at all, if that’s financially possible. You are paying interest on these credit card balances. At the very least, if you are able to pay these balances in full, you should look at your disposable income and try to at least double your minimum payments and focus before all about your highest payments,” Noelle Carter, president and CEO of Buffalo Consumer Credit Counseling Service, told Pheben Kassahun via Zoom.
So how can you turn the tide?
Here are a few tips :
- Look at what disposable income you have.
- After that, try to pay off balances in full or double your minimum payments.
- Target the smallest amount first.
- You can also choose the option to pay the highest interest rate first.
Try consolidating if you have a lot of different accounts.
“Get everything together in one place, you have maybe a year to pay it off now. Interest free. You can try to make a budget, some type of monthly plan. Write it that way. Even if you can’t report during this year, at least it saves you time,” said Nicole Hunter, clinical assistant professor of finance at the University at Buffalo School of Management.
University at Buffalo School of Management Clinical Assistant Professor of Finance Nicole Hunter also suggests borrowers leave their creditors or lenders are aware of their financial difficulties.
Hunter said, “That’s something you can do too. You can just contact them and say, ‘Hey, is there some sort of payment plan? I can’t follow. Most of the time, they’ll want to work with you.'”