JACKSONVILLE, Fla. – New data from the Federal Reserve of New York suggests Americans battling inflation use their credit cards more than ever.
RELATED: CBO projects a $188 billion decrease in this year’s federal budget deficit, but debt would then grow
The Federal Reserve reported that credit card debt has climbed to a record high of $1.13 trillion, higher than it was before the pandemic. The reason why can mostly be attributed to the rising cost of living and the ease of swiping a credit card.
“I use a credit card for any purchase, but I don’t overspend my limit,” a Jacksonville shopper said.
Another shopper said she uses her card for expenses she couldn’t afford. Another shopper said they use their card mostly for vacations.
Ashley Avery of First Florida Credit Union said high credit card debt is partially not the spender’s fault.
“It’s hard for us to change our spending habits so drastically,” Avery said. “And what’s happened is all of the increases in the interest rates, and to borrow that money, and the daily cost of living has increased, but we haven’t stopped spending the way that we typically spend and so that’s how we’re seeing a lot of people getting into such high credit card.”
According to Bankrate, credit card balances are up 15% over the past year and 46% since the beginning of 2021. High inflation and high interest rates are a big part of the story with the average credit card charging a record-high 20.74%.
So, what should you do if you’re carrying a high balance? Avery said the best thing to do is set a goal and make a realistic plan to tackle debt.
MORE: A Jacksonville man paid off $50,000 of credit card debt in just over a year. Here’s how he did it
“Lay all of your debts out, write everything down, see where you are, because it’s so much better to face it head-on than it is to try to stick your head in the sand, so to speak,” Avery said.
You can try the Snowball Method, which is paying off your debts from smallest to largest, or the Avalanche Method which is paying off your debts from the highest interest rate to the lowest interest rate.
If you’re in too much debt, it’s a good idea to get help. Money Management International offers free credit counseling in Jacksonville. It’s helped hundreds of people find solutions to pay down their debts.
Thomas Nitzsche of Money Management International said they are seeing an influx of people reaching out for credit counseling given the new record high for credit card debt.
“Last month, we saw about a 65% increase, year over year in the number of people going through online counseling with us, which is just really, really incredibly high increase,” Nitzsche said.
You should be looking for help if you feel like you’re not making progress paying down your debt or maybe you’re starting to miss payments.
“If you’re financially stressed, that’s really the right time to start looking at what your options are,” Nitzsche said.
Another option to consider is a balance transfer.
If you can get approved for a new line of credit, you can transfer one credit card to another and pay 0% interest during a set introductory period.