Julián González is a family man who makes a living in New York working as a waiter in a “luxurious” restaurant in Manhattan. And although he claims to feel “happy” in the Big Apple, because he has a “loving” wife, two teenage children, a baby, a cat, a dog and even two fish, with laughter and gestures of concern, he adds to his list of “possessions,” he adds that he has a current debt of more than $12,000, between the three credit cards he uses. Lately, the collections have started to “choke” him, and he mentions that he barely tries to maintain good credit by making the minimum payments.
The Colombian immigrant, who is part of the millions of New Yorkers who have active debts with their credit companies, which according to WalletHub currently exceeds the collective figure of $1.2 billion dollars, affirms that only when debtors like him see themselves “with the water up his neck with the debts and the very high interests charged by the cards”, a taste of regret surrounds him, and he recognizes that there is a lack of better financial education among communities such as Latinos.
“Credit cards at first seem like a salvation, especially now that everything is very expensive, and you resort to those lines of credit to be able to cover things that you cannot cover with your salary. But then comes the headache, if they are used without a plan,” comments the father of the family, emphasizing that if it were not for the purchases he makes with his credit cards, he would not make ends meet.
“We sometimes believe that the amount on the cards is our money and in the end we end up making unnecessary expenses, and one begins to fall behind on payments. There come additional charges and one spends years paying eternal debts that do not reduce. You have to learn to use the cards in a better way,” she stressed.
Brenda Linares, who has also had her “stories” with credit cards, confesses that “it was very expensive” for her to learn the lesson about how to use the lines of credit that banks and corporations offer like “hot cakes,” and advised those who use credit plastics that do not “go crazy” with debts that can be avoided.
“The problem is not the credit cards themselves, because the truth is, it is good to have a credit option on hand, in case of emergencies or when you want to give yourself an extra treat. The problem is that you cannot go into debt beyond what you can pay. That’s when the blow comes,” said the young Mexican, who for several years was reported to credit centers and could not even open a bank account again for almost a decade.
“When I was younger, I took out two cards, thanks to the fact that I had a good income, and in less than a year, I had a very high debt that I struggled a lot to be able to pay. The calls from collectors did not stop, the letters had me stressed and my credit score went to the floor,” says the social worker. “Sometimes one buys and buys and does not measure, not only the effect of the payments that must be made in the future, but also that of the interests, which are the big business of corporations. “I’m not saying that you shouldn’t have cards, but you have to know how to use them.”
And although according to credit institutions, and financial expert sites such as Debt.com, New Yorkers in general have good management of their debts and mostly comply with their obligations, the debt of credit card users in the Big Apple and the rest of the state have been increasing considerably in 2024.
New York recorded the fourth-highest increase in credit card debt in the United States last quarter, adding $2,821,527,680 to the piggy bank of money owed. And it is estimated that an average New York household, including Hispanic households, currently has card debts close to $8,964.
But according to the string of data, as stated by Latin debtors such as Julián González, the number of those who have begun to delay payments, who must also face penalties for not paying on time, has been increasing, as revealed by the Banco de la New York Federal Reserve.
Figures from that entity indicate that around 8.9% of credit card balances went into default during the last year, which is in line with the complaint of New Yorkers who claim that inflation, the increase in prices and the cost of life, as well as the stagnation in the increase in salaries, elements to highlight after the pandemic, has made the lack of money more felt.
“The increase in debts and the increase in loans and balances in arrears are a clear representation of the difficulties that New York families are going through, not only low-income but also middle-income families, who were not so affected before. with financial fluctuations,” said José Rodríguez, financial advisor in the Big Apple.
And although thousands of cardholders have tried to face the economic difficulties with their credit cards, the big problem faced by those who have begun to fall behind on their payments, according to the expert, is that the high interests charged by the cards, estimated According to Forbes at 27.65%, they don’t give a break.
“The trend is quite harsh for those who have acquired debt, and the outlook looks more discouraging if debtors limit themselves to making minimum payments. Tip number 1 is not to assume debts that you know in advance will be very difficult to pay and always consult with financial advisors who can explain well the terms under which a card is being accepted, because there are those who do not even know what the interest they are paying on their debts.”
The New York Federal Reserve report goes further and assures that almost 20% of credit card holders are already “at the limit”, and have used at least 90% of the quota they have available, which according to the financial body puts them in a more likely position of not being able to meet their credit obligations.
And when talking about which New Yorkers would be facing the most difficulties with their cards, the entity highlights that people under 30 years of age and those who reside in low-income neighborhoods are more likely to be at the maximum limit of using their debt quotas. Especially the debtors of the so-called Generation Z, have shown that 1 in 6 was about to exhaust their credit, while among people over 60% only 4.8% have the same outlook.
And such is the concern that the increase in debts and the difficulties to pay on time by thousands of New Yorkers has generated, that the State Department of Consumer Protection itself has called for those who use cards not to jump. into a vacuum without knowing well what it entails and on the contrary they become informed and educated financially.
That state agency warns that on average, currently those who use these lines of credit usually have about 4 cards and have outstanding balances of around $9,000, which becomes a headache.
“Overwhelming credit card debt can happen to anyone: college students with their first credit card, the average family spending too much today and saving too little for tomorrow, or seniors living on a fixed-income apartment with unexpected expenses and “Credit card debt has a devastating effect on the lives of millions,” says the Department of Consumer Protection, which created an educational brochure that seeks to warn New Yorkers about the use of these credits.
“Choosing the right credit card and using it wisely can prevent you from falling into serious, long-term debt,” they add, noting that you should compare credit card offers on the market and contact banks or obtain accurate information.
“Before signing a credit application, ask questions to make sure you understand the terms and conditions such as fees and penalties. For example, will your interest rate increase if you pay late or are late in paying other bills?; Use a card that has lower interest rate costs (known as annual percentage),” they add. “It is always best to pay credit card bills in full at the end of each month. Otherwise, you’ll be paying expensive interest on top of the money you owe. And don’t accept credit card offers simply because the issuer thinks you qualify. Only you know how much you can afford to pay.”
Credit card information
An estimated 73% of Hispanic adults have a credit card
8.9% of debtors in New York state defaulted in the past year, according to the Federal Reserve Bank of New York
$1.2 billion dollars is the collective debt of cardholders in NY
$2,821′ 527,680 increased the debt in NY in the last quarter
27.65% is the average interest on the cards
The average New Yorker has 4 credit cards
$9,000 on average is the debt that New Yorkers have 20% of credit card holders are already “at the limit”