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At Extreme Investor Network, we believe in providing unique and valuable information to help you make informed decisions about your personal finances. In this blog post, we will discuss the latest trends and insights in the world of personal finance, specifically focusing on credit card debt and interest rates.
Who is falling behind on credit card bills?
According to New York Fed researchers, borrowers who may have overextended themselves during the pandemic are falling behind on credit card bills. These borrowers are often renters with shorter credit histories and lower credit limits, making them more vulnerable to financial issues. In the past year, approximately 9.1% of credit card balances transitioned into delinquency, highlighting the challenges many are facing.
Homeownership has been a key factor in wealth creation, but those priced out of the housing market are struggling to achieve the same financial security. Millennials transitioning into delinquency may be feeling the long-term effects of entering the workforce during the Great Recession, leading to lower long-term earnings.
50% of Americans are carrying a balance
A staggering 57% of consumers rely on credit cards to make ends meet, according to Achieve’s survey. With job losses and reduced income being cited as main reasons for falling behind on payments, it’s clear that many are facing financial challenges. Additionally, half of cardholders carry debt from month to month, highlighting a concerning trend.
Credit card rates top 20%
Credit cards have become one of the most expensive ways to borrow money, with rates topping 20% in recent years. As the Federal Reserve raised interest rates to combat inflation, credit card rates followed suit. Lower-income households, already struggling to cover price increases, have been hit hard, with the average credit card rate reaching an all-time high.
It’s crucial to pay down credit card debt as soon as possible to avoid high interest costs. Making minimum payments towards the average credit card balance of $6,218 could take 18 years and cost over $9,300 in interest. At Extreme Investor Network, we emphasize the importance of managing your debt wisely to secure your financial future.
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