domoyega | E+ | Getty Images
As credit card debt swells and interest rates spike, many spenders are fearful about high balances.
Nearly 1 in 5 Americans are afraid to check their credit card statements, according to a recent report from travel website Upgraded Points, which surveyed 3,500 people in April 2022.
Indeed, credit card balances jumped $71 billion year over year, topping $841 billion during the first quarter of 2022, the Federal Reserve Bank of New York reported.
This week, the Federal Reserve is expected to raise its benchmark rate by three-quarters of a percentage point, sending credit card interest rates higher.
The average credit card interest rate was 17.46% as of July 20, according to CreditCards.com, and it may approach a record high of 19% by the end of the year.
And many Americans are turning to plastic to fund their trips. Vacations are the top credit card expense in 17 states, according to the Upgraded Points report.
Other popular purchases were computers, furniture, automotive expenses and televisions, the survey revealed.
However, the same report found more than one-third of respondents have used credit to purchase something they couldn’t afford but didn’t want to wait for.
“Instant gratification has become more accessible than ever before,” said certified financial planner Cecil Staton, president and wealth advisor at Arch Financial Planning in Athens, Georgia.
Consumers have more ways to finance purchases, but high-interest credit card debt can be one of the toughest to pay off, he said.
With many Americans struggling, it’s easy to see why some may avoid credit card statements, said Matt Schulz, chief credit analyst at LendingTree. However, it’s a critical budgeting tool and a way to protect yourself from fraud, he said.
“With rampant inflation and rising interest rates, it is even more important to check your card statements regularly,” Schulz said.
If you’re wrestling with a high credit card balance, you can try calling your issuer to ask for a lower interest rate. “It works more often than you’d imagine,” he said.
You may also qualify for a 0% interest balance transfer offer, allowing you to shift the balance to another credit card with a 0% promotional rate for a limited period of time, Schulz suggested. And lower-interest personal loans may also be worth exploring.
“These steps can help you feel a little more empowered and can be motivating, but you have to take the first step,” he added.
View original Post