A Debt.com credit card survey shows that just over half (51%) of Americans say inflation has forced them to “carry a higher monthly credit card balance” than before the U.S. prices start to skyrocket.
“Inflation may be declining, but not enough for Americans to reduce spending on their credit cards,” the report says.
55% said “price increases due to inflation forced me to use my credit cards to make ends meet,” and 31% maxed out credit cards in the past two years “while inflation and interest rates have risen.”
As the 4th of July holiday approaches, Howard Dvorkin, the president of Debt.com, has suggested Americans declare credit card independence, however he acknowledges that survey shows that is currently impossible. : “It is one thing to identify the enemy and quite another to defeat him.”
Relevant data from the survey:
· More than 30% of those surveyed said they had maxed out their credit cards in the last two years.
· The survey asked: “Do you know the average APR of your credit card?” More than one in four (38%) did not know.
· When asked if they had considered credit counseling, debt settlement or a credit card balance transfer to resolve their debt, 58% had not.
“You can’t get out of debt if you don’t understand what’s keeping you there,” Dvorkin said of cardholders who don’t even know how much interest they pay each month. “And you certainly can’t get out of debt if you don’t even know your options.”
Debt.com tips for getting out of debt:
· Leave the “spend, spend, spend” mentality behind and start saving. At a minimum, you should keep between 5 and 10% of each salary in a savings or investment account.
· Check the credit utilization rate on each card. It is not recommended to use more than 30% of the credit limit. Using more than 30% will lower your credit score, you may risk increased interest rates, and you may be denied credit.
· Know your debt-to-income ratio. This measures the amount of debt a person has in relation to their level of income. It is a good indicator of financial health and it is recommended to maintain a ratio of 36% or less.
· Keep your credit score high. A high credit score allows you to negotiate for the best interest rates and terms on new loans and credit cards.
Keep reading:
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· The products that have risen the most in price in the US in the last year, up to May 2023