Last year credit card debt in America passed the $1 trillion mark for the first time ever. According to a study from WalletHub, credit card payments are coming later than previous years and sometimes not at all.
“As well as the economy seems to be doing, this is really not good news,” said Jill Gonzalez, the senior analyst at WalletHub. “Since the recession, consumer confidence has been building and that means consumers are spending. Unfortunately now we’ve reached the point where we’re spending beyond our means.”
People in America are finding more jobs and making more money, but Gonzalez said interest rates are also going up. The Federal Reserve raised interest rates last month and rates are expected to rise again. Every time interest rates go up, about $1.5 billion are added to Americans’ collective debt.
“That’s why I think Americans need a wakeup call here because their debt is only getting more expensive,” Gonzalez said.
Most people don’t pay attention to the Federal Reserve and changing interest rates nationally, according to Gonzalez. Many consumers easily lose track of their own credit card debt. 65 percent of consumers believe health care is worth getting into debt for and 50 percent comes from housing. At third and fourth place, travel comes in at 35 percent and clothing with 15 percent.
“Things like electronics, dining, entertainment, people said were still worth getting into debt for,” Gonzalez said. “So obviously you have two opposite ends of the spectrum here, from your needs to your luxuries.”
With tax season underway, Gonzalez said now is a good time to look at your spending habits. Then make the necessary changes to start paying off credit card debt, prioritizing expenses such as medical bills and limit spending on luxuries such as travel and entertainment.
“I’m sure many people feel overwhelmed by it all. Remember this is just credit card debt,” Gonzalez said.
Consumers still have auto loans and mortgages to pay, but Gonzales said credit card debt is a good place to start.