Financial expert offers useful tips on how to make a serious dent in your credit card debt
NEW YORK -- Americans carry more than $1 trillion in credit card debt, according to the Federal Reserve Bank of New York.
CBS New York has learned more about what's behind the crisis and how consumers can dig their way out.
"Inflation, everything is just getting way more expensive," said financial expert Rachel Lauren.
Lauren's Upper East Side apartment is headquarters for Debbie Inc., her free money management app.
The Federal Reserve Bank recently announced a new debt record. Americans now collectively owe $1.13 trillion in credit card debt, which is a 46% increase from the beginning of 2021.
"A lot of it is inflation, but I also think we are a deeply, deeply consumerist society," Lauren said.
She said too many Americans seem addicted to shopping.
Reasons people rely on credit cards include job loss, divorce, student loans and gambling.
And in New York City, add skyrocketing rents.
WATCH: Americans report less money in savings, more credit card debt
Using the Debbie app to get out of $3,000 in credit card debt is Bronx resident Illianna Ramirez, who works in retail.
"At the time, it was during the pandemic, so money was tight and I had a lot of credit cards, so I used them," Ramirez said.
"The way the app works is users come in, they link their accounts. So all their debt accounts or savings accounts, we help them set up payoff and savings goals and every month that they meet those goals they earn points," Lauren said.
Ramirez said what works for her are the app's financial incentives. She pays nothing and gets rewards.
"It was honestly the fact that it was giving us incentives to do what we need to do to bring down our debt. It was also kind of helping us because it was giving actual cash to put towards your debt," Ramirez said.
Lauren said her Debbie app makes money by working with credit unions to fund those cash rewards.
Users become more money conscious. Lauren said they make better micro decisions, which add up.
"Think to yourself before you buy it, hey, if I came back a week later would I still want this?" Lauren said.
She said she tells people to find side hustles to make extra cash, adding she does that herself.
"I get emails into my inbox saying, 'Hey, complete the survey for a $30 gift card.' Wonderful. I do that and that pays for like my Amazon grocery delivery," Lauren said.
With the average American an estimated $6,000 in credit card debt, she says the time is now to chip away at it and pay it off.
