Could this worrying trend mean bad things for consumers?
- Suze Orman worries about the increase in unpaid credit card debt.
- It is currently a particularly difficult time for owing money on credit cards.
- Orman has some tips on what to do if you’re in debt, including a balance transfer.
Suze Orman is a personal finance expert who shares her opinion on many money matters. Recently, she became concerned about a specific credit card trend. She also offered some advice for those affected by the troubling patterns of credit card use that worries her.
This credit card trend is concerning
In March this year, Suze Orman said she was worried about an increase in unpaid credit card bills. Specifically, she pointed out that in the last quarter of 2021, the largest quarterly increase in unpaid bills occurred since the New York Federal Reserve began measuring this data.
Discussing his concerns about this, Orman noted that the increase in debt came after a period when many households had managed to reduce their bills. During the COVID-19 shutdowns, spending options were limited, and stimulus checks offered extra money to many so people could pay their bills. That trend has started to reverse, however, and now card balances have been rising rapidly.
Orman isn’t just worried about people charging more and not paying back. She also warned that credit card debt could be more expensive than usual.
“Right now could be a particularly tough time to take on credit card debt,” she said. recent rise in the rate of inflation. Once the Fed starts doing this, credit card issuers are likely to respond by increasing the interest rate they charge on outstanding balances. And this rate is already very high: the average rate is over 16%. %.”
What should you do if you have credit card debt
Orman is right to warn that rising credit card debt could be a big problem, especially as card interest rates rise. If more consumers face high credit card bills, it could affect their ability to save and spend in the future. This can affect both individual household finances and the economy as a whole.
The good news is that she has some advice for those with a balance who could be affected by these high interest rates. Specifically, Orman advises those currently in credit card debt to avoid spending on “wants” rather than needs until your debt is exhausted. She also suggests taking on side jobs to get you out of debt.
For those currently facing very high interest rates, there is also another potential strategy that could help reduce debt repayment costs. This is to take a balance transfer. Orman suggests this for those with a FICO® score of 700 or higher who may qualify for a card with a long 0% APR on transferred balances.
If you can take this approach, you can lower your high rate to 0% for a period of time so that your entire payment goes towards reducing your card’s principal balance rather than high interest rates.
If you can follow these steps, I hope you can get out of debt soon so that you are no longer one of the many Americans contributing to the rising credit card balances that troubled Orman so much.