STATEN ISLAND, NY – The cost of living for Americans has become increasingly expensive, with prices rising at gas pumps, grocery stores and just about everywhere else. It’s no surprise, then, that American consumers have racked up credit card debt in 2021.
Credit card debt grew by $74.1 billion in the fourth quarter last year, resulting in a net increase of $87.3 billion, according to research by the finance website. WalletHub. That’s almost double the average annual increase in credit card debt over the past 10 years, which is just $48.5 billion.
The average household debt of New York residents in 2021 was $15,760, with a total outstanding debt of $49,912,334,268 for the city, according to WalletHub.
WalletHub experts have predicted that the cost of credit card debt will be higher in 2022 as the The Federal Reserve should start raising interest rates this month. Experts have predicted that the cost of existing credit card debt will rise by $1.6 billion to $3.2 billion in 2022 as further rate hikes are expected throughout the year.
While WalletHub said 33 million Americans will have more credit card debt by the end of 2022, there are ways to ease financial pressures by managing finances effectively. The finance website provided the following advice:
- Create a budget and stick to it. It is good to have an understanding of your expenses. Once you see where your money is going, you can reevaluate how you want to manage it. Make a list of your expenses, including debt payments, emergency fund contributions, and other savings, and rank them according to their priority. Trim the details if necessary and be sure to stick to your budget plan.
- Build an emergency fund. Putting money aside each week or month can be very helpful, especially in times of need or unexpected unemployment. With patience, you can gradually save and have a safety net. Think about the ideal amount you would need to set aside to be safe if you were out of work for a year, and slowly build that emergency fund.
- Evaluate your professional situation. If budgeting and planning your finances isn’t helping your sense of financial security, start looking for other jobs in your area of interest that pay higher rates. Don’t be afraid to invest in your skills and make yourself more marketable, as long as it’s worth it!
- Pay off your most expensive debt first. Focus on putting the majority of your monthly payments on the balance with the highest interest rate first. Then make the required minimum payment on the rest of your debts. This way, your most expensive debt will be paid off faster, allowing you to spend less on interest.
- Improve your credit. Once you improve your credit, the cost of your debt will change significantly. This will allow you to pay off your debt faster. Better credit also allows for better opportunities to find employment or housing.