Now – not later – is the time to get serious about eliminating credit card debt. Taking a step back and focusing on financial health and wellness will pay off far into the new year.
SAN MATEO, Calif. (PRWEB) December 11, 2018
The total amount of debt that American consumers owe grew sharply in October, even as more people are employed and personal income has increased. With the higher debt load, a volatile market, and a potential new interest rate hike on the horizon, concern for consumers’ financial health increases.
“High levels of debt are worrisome any time of the year, but particularly so more than a month before Black Friday, the traditional kickoff for holiday spending,” says Daniel Cohen, managing editor of Bills.com®, a resource providing simple tips, advice and tools to help consumers make smart financial decisions. “It is not uncommon to see debt levels increase at the holidays, but if interest rates continue to rise, consumers carrying debt are going to feel the squeeze even more.”
According to figures released Dec. 7 from the Federal Reserve, total consumer credit increased at a seasonally adjusted annual rate of 7¾ percent in October. Revolving credit – primarily credit card accounts – stood at $1.037 trillion, increasing at an annual rate of 10¾ percent. In contrast, revolving credit decreased by $300 billion in September, to $1.028 trillion.
The latest figures show that nonrevolving credit increased at an annual rate of 6¾ percent, to $2.926 trillion. Nonrevolving debt includes outstanding credit for items such as vehicles, education and unsecured installment loans. The consumer debt data does not include home mortgages or home equity borrowing.
Along with this record amount of debt, consumers have been facing increasing interest rates throughout 2018. If the Federal Reserve ups rates again this month, it will be the fourth rate hike this year. That means the cost of debt will go up again, explains Cohen, in higher minimum payments and higher interest charges. The average credit card interest rate broke a new record this week, moving to 17.15 percent.
“Now – not later – is the time to get serious about eliminating credit card debt,” says Cohen. “It is tempting to rack up purchases during the holidays, but critical for consumers to look at their overall financial picture. Taking a step back and focusing on financial health and wellness will pay off far into the new year.”
People who are committed to pay down credit card debt have several options, says Cohen. “The good news is that more people are working,” citing the U.S. unemployment rate that is at its lowest point since 1968, remaining at 3.7 percent through November. “If consumers can get their budgets in line by reducing spending and paying down debt more aggressively, it is a good time to look into a debt consolidation loan, a debt management program or debt settlement.” The approach that will work for an individual consumer will depend on several factors, including the amount of debt the consumer is carrying, their credit scores and debt-to-income ratio, and the size of the monthly payment they can afford.
Bills.com is part of the Freedom Financial Network®, a family of companies whose products and services provide innovative solutions that empower people to live healthier financial lives. The Bills.com resource site provides simple tips, advice and tools – including the Bills.com debt relief calculator – to help consumers make smart financial decisions.
Headquartered in San Mateo, California, Freedom Financial Network also operates an office in Tempe, Arizona, and employs more than 2,200. The company has been voted one of the best places to work in both the San Francisco Bay area and the Phoenix area for several years.