BUFFALO, N.Y. (WKBW) — Americans are binging on credit card debt, which recently grew at its fastest pace in more than twenty years.
This comes at a time when interest rates are expected to go up.
Towards the end of 2021, credit card balances increased by $52 billion to $860 billion, nationwide, according to Federal Reserve Bank of New York.
Consumer Credit Counseling Service of Buffalo president and CEO, Noelle Carter, said ideally, carrying balances on credit cards is highly discouraged.
"People should definitely take a look and start to write down their income and their regular. Monthly living expenses to understand how much disposable income they really have. Ideally, we wouldn't be carrying balances on credit cards at all, if financially possible. You're paying interest on those credit card balances. At the very least, if you're able to pay off those balances in full, you should take a look at what disposable income you have and try to at least double your minimum payments and focus in on your highest payments at first and foremost," Consumer Credit Counseling Service of Buffalo president and CEO, Noelle Carter told Pheben Kassahun via Zoom.
So, how can you turn things around?
Here are few tips:
- Look at what disposable income you have.
- After that, try paying off balances in full or double your minimum payments.
- Target the smallest amount first.
- You can also choose the option of paying the highest interest rate first.
Try and consolidate if you have a lot of different accounts.
"Get it all into one place, maybe you have a year to pay it off now. Interest free. You can try to come up with a budget, some type of monthly plan. Get it down that way. Even if you can't pay off in that one year of time, at least it buys you some time," University at Buffalo School of Management clinical assistant professor of finance, Nicole Hunter said.
University at Buffalo School of Management clinical assistant professor of finance, Nicole Hunter, also suggests borrowers let their creditors or lenders be aware of their financial struggles.
Hunter said, "That's one thing you can do too. You can just reach out to them and say, "Hey, is there some sort of payment plan? I can't keep up. They are most times going to want to work with you.'"