People struggling with credit card debt. Here are some tips
FORT LAUDERDALE - Americans struggling with credit card debt hope relief will come with more expected interest rate cuts later this year. However, for many, they find themselves in a tough spot.
According to a recent Bankrate survey, 37% of cardholders have maxed out a credit card or come close since the Federal Reserve began hiking interest rates in March 2022. More than half of those in that situation blame inflation for their situation.
CBS News Miami spoke to people in our community who try to avoid maxing out credit cards those in the know for tips to pay down debt if you're in hot water.
On a weekday afternoon in Fort Lauderdale, we saw people walking up and down Las Olas, passing restaurants and shops, enjoying the cuisine or walking out with gifts.
"Always been my approach that if I can't afford something, I'm not going to buy," Ramez Jamali. said.
He said he's a cautious spender after learning what happens when you're not at a young age.
"$5,000 and five credit cards when I was 17," Jamali said "I couldn't afford it. My mom bailed me out."
She put him on a better path.
The risk of falling into debt has others staying clear of even having one credit card in their wallet.
"Scared to have a credit card because I'm scared to get into situations like that," said Travis, who was on his way to work in Fort Lauderdale. "I've thought about it, but I feel like it's a lot of risk and financial responsibility."
"I have my neighbor that lives next door to me and she can't manage," said Viviane, a shopper out and about in Fort Lauderdale. "So, be mindful and don't spend more than what you can afford."
Craig Kirsner, a financial planner, said: "Inflation has really been eating into people's purchasing power. So, they've had to turn to credit cards."
Last month's Federal Reserve Bank of New York study found that Americans increasingly worry about making minimum credit card payments. Over 14% of people thought they might miss making their minimum debt payment in the next three months, which is the highest mark since the beginning of the pandemic.
"Stopping credit card usage immediately is the No. 1 plan, and then you can go into the other more advanced strategies," Kirsner said.
Kirsner spells out his strategy:
- Create a budget that includes making credit card payments
- Focus on the debt with the highest interest rate first or pay off the card with the lowest amount.
- Call your credit card company.
"Saying, look, I can't pay the payment," Kirsner said. "What's the best deal you can work out? It will ruin your credit ... Not forever."
And, as a last resort, he said to consider debt consolidation.
"Once you go to a debt consolidator, your credit is definitely going to get messed up," Kirsner said. "You have to make sure that it's a fixed interest rate, and that is fair, and it's not more than what you're paying now."
Kirsner advises that if you choose the debt consolidation route, explore available offers to help pay down debt and limit credit card usage to create a plan to reduce remaining debt.
The best approach, he said, is to map out a realistic budget to avoid getting deep into debt.