THE TROUBLING NUMBERS
For the first time, credit card debt has surpassed $1 trillion, and is now at 1.03 trillion. In the second quarter alone, it shot up $45 billion or 4.6%.
Now compare these numbers to the overall household debt which spiked by $2.9 trillion since the end of 2019 before the pandemic.
“Household debt” includes credit card debt, mortgages, student loans, and car notes. And credit card debt is now almost 1/3 of the average household debt. That is very concerning when you think about how expensive a car or a home is. People are really drowning in debt because of these higher interest rates and increased cost of living.
In a recent study, 35% of Americans said they were carrying their highest level of debt ever, or coming close to it. Lending Tree statistics revealed that in the second quarter of 2023, the average APR on new credit card offers was about 24.24%. The average for all current credit card accounts is 20.68%. And the average for all accounts that accrue interest is 22.16%.
IMPACT OF FED RATE HIKES
In the last year, interest rates have gone up 4.5 - 5.25 percentage points and continue to grow. The average credit card interest rates are now over 20%. So to put that in perspective, if you're making just minimum payments on an account that has a $6,000 balance, it would take you 17 years to pay off that debt.
Credit card companies are actually now required to state on the first page of their monthly statements a minimum payment warning that shows you how long it will take to pay off your debt with no new charges and only making minimum payments.
WHAT CAN YOU DO ABOUT IT?
If you’re only making minimum payments, what can you do to start digging out of debt?
- Stop using credit cards.
- Get on a budget.
- Live on less than you earn to have a margin.
- Use the “snowball” method to pay off credit cards, paying off debts in order of balance owed (smallest to largest) and applying the newly freed-up monthly cash to pay down the next-biggest debt.
STILL NEED HELP?
If it seems like taking those steps would be difficult or impossible for you right now, Christian Credit Counselors can help.
CCC offers a free consultation that consists of a comparison estimate wherein they outline all the benefits & fees of the program. There is no commitment. Their goal is to educate people about how they can help … and provide information so you can make an informed decision. They can also help you set up or adjust a budget.
Christian Credit Counselors offers debt management services that help clients get out of debt 80% faster, doing it the right way.
They have pre-negotiated interest rates, terms, and conditions with the credit card companies. They can help lower your monthly payments to a manageable amount, with new interest rates ranging from 1-12% APR, depending on the creditor.
This program is different from debt settlement or a consolidation loan. The goal is to pay off your debt in full in adherence to Proverbs 3:27: “Do not withhold good from those to whom it is due, when it is in your power to do it.”
Learn more at ChristianCreditCounselors.org
On today’s program, Rob also answers listener questions:
- Should you contribute to a 401k through an employer if the employer doesn’t match any of your contributions?
- Does receiving a large inheritance make you more likely to be audited by the IRS?
- How can you determine what taxes will be due on the sale of a property that belonged to a now-deceased parent?
- Should you always try to get out of debt as quickly as possible, or does it sometimes make sense to simply continue making monthly payments and use the money you would have used to pay off the debt in other ways?
- Do you have to pay taxes on inherited money?
RESOURCES MENTIONED:
Remember, you can call in to ask your questions most days at (800) 525-7000. Faith & Finance is also available on the Moody Radio Network as well as American Family Radio. Visit our website at FaithFi.comwhere you can join the FaithFi Community, and give as we expand our outreach.
