East Texas financial experts explain why credit card debt is soaring
TYLER, Texas (KLTV) - Credit card debt is soaring at a time when credit card interest rates are rising.
Bill Dendy, CPA and Money Manager with Raymond James in Tyler said this is because of inflation.
“The interest rates are over average 17 and a half percent now, and that means that we could buy a whole ‘nother one of what we purchased every five years if we just didn’t use credit,” Dendy said. “Yet for many, they’re having to use credit more than ever before because things are costing more, and they haven’t adjusted their lifestyles to the new cost.”
According to the Federal Reserve Bank, more consumers are relying on credit cards to get by, which has helped bring the total credit card debt to $890 billion.
UT Tyler Professor of Finance Vivek Pandey said rising costs have made some East Texas families turn to credit.
“They’re putting their purchases, even their regular household purchases on credit card, and that’s where it becomes a little bit concerning,” Pandey said.
According to the Federal Reserve Bank, credit card balances rose 13% in the second quarter of 2022, the largest year-over-year increase in more than 20 years.
“Because the inflation that we’ve seen higher than we’ve seen in 30 years and so it’s causing them to turn to credit as their first easiest way of making up the differential,” Dendy said.
So what should you do now?
“Number one, make sure your interest rates are reasonable. Number two, get the most benefit from every dollar you spend; get rid of those things that you’re spending money on that you don’t get enjoyment out of, and then, number three, seek professional assistance if you are having difficulty doing any of that,” Dendy said.
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