Debt levels are rising and so are interest rates. Experts say that the combination makes now the time to pay off your credit card debt.
The Federal Reserve recently said that U.S. consumer borrowing soared 8.8 percent in November, the biggest single-month jump in more than two years. While that news is a sign that consumer confidence is on an upswing, it’s also a sign that many people are going to struggle with credit card debt.
The Federal Reserve also said that credit card debt also jumped in November, up $11.2 billion to a new record of $1.02 trillion.
While it’s great that consumers are feeling more confident, experts caution that the confidence can often result in people over-extending themselves. With an interest rate hike on the horizon, it means the cost of carrying a credit card balance is also going up.
“Everyone has this sense that there is a storm brewing,” said a spokesperson for the National Foundation for Credit Counseling. “All indications that we’ve seen are that people are carrying higher balances from month-to-month and more are behind on their monthly payments.”
The spokesperson suggested that one way of dealing with debt on plastic is to ask the credit card company if they will lower your interest rate. The average annual interest rate on credit cards is about 16 percent.
While some companies will dismiss such a request, others might offer a balance transfer to a card with no interest or low interest, in exchange for a fee and your agreement that the debt will be paid off at an accelerated rate.
If you’re overwhelmed by credit card debt, another approach is to speak with an attorney experienced in negotiating a new balance that will result in lower monthly payments that you can afford. This can result in two enormous positives: lowered debt and bankruptcy avoidance.
Contact Cantwell & Goldman, PA, to learn more.