Credit Card Crisis Is Here: DO THIS NOW !

Credit card debt in the U.S. has reached a staggering record high, topping one trillion dollars for the first time, this according to the Federal Reserve Bank of New York, as millions of cardholders carry balances month after month, year after year. The United States continues to show signs of a tough economic situation. On August 8th, the country broke a new record in credit card debt, reaching a historic figure of one trillion dollars for the first time in history, affecting even those who do not use credit cards. Although the government claims that inflation has decreased in the daily lives of Americans, prices remain too high, leading more people to use their credit cards due to their inability to pay all their bills. That's why in this video we will explore the most recent information, how this affects Americans, and finally, a step-by-step guide recommended by experts to reduce your credit card debt. Before I get into the details, please like and subscribe if you enjoy this type of content. Now, one of the worst factors exacerbating this problem is that people feel ashamed to talk about it. Two out of every five Americans believe that credit card debt is simply too embarrassing. This is problematic because credit card debt will eventually impact the economy. One of the major indicators highlighting this new problem is the delinquency rates, which have increased at an alarming rate in the past year. But what are delinquency rates? Delinquency is a term generally used when people cannot pay their credit card bills on time. A recent study reveals that Americans prioritize other payments before credit card bills. In the survey, most respondents stated that they first pay their mortgage, then car loans, and lastly credit card payments. Other data also indicates that individuals aged 18 to 29 and 30 to 39 are at higher risk of not paying their credit card bills. Additionally, one out of every 10 credit card users has a delinquent debt of 90 days or more. Now, when we add the current economic difficulties facing the country, high inflation, and historically high interest rates, people have no choice but to keep accumulating debt, leading to more credit card accounts being open to cover daily expenses. If you feel ashamed of your credit card debt, you are not alone. More than a third of Americans feel embarrassed to discuss this issue. In fact, we are so ashamed that, in some cases, we hide it from our partners. 15% of the 2,000 people asked said they spend more money than their partner would approve of, and 9% admitted to having a secret credit card debt. This may also explain why financial stress is the primary reason for divorces. Surprisingly, those earning six figures or more are the ones in credit card debt for longer periods. The point is that, everyone with credit card debt lives with it, regardless of age or the amount of debt. However, it is better to openly discuss this problem with trusted individuals because, like any other issue, to solve it, we first need to admit that we have a problem. This is an event that not only affects each person but also the entire country. This is because 54 million people have been in credit card debt for at least a year, and nearly half of all credit card holders carry their debt from one month to the next. Now, one of the most alarming pieces of data is that credit card debt has grown as much as the stock market this year. As we can see, one of the world's most important indices, the SP500, rose by about 17% this year, while credit card debt grew by 16% this year. Considering that the average annual return of the stock market over the last 100 years has been between 7% and 10%, and now it's at 17%, it means it's not a normal performance. So, if you are one of the approximately 190 million Americans with a credit card and if you have an average balance of more than $5,000, your debt is probably growing at the same rate as one of the fastest stock markets we've had in decades. This means you will never be able to accumulate significant savings or wealth, even if you try to overcome your credit card debt through investments. So, if you currently have credit card debt, over the months, your interest will continue to accumulate. The current monthly interest rate is approximately 20%, making credit cards one of the most expensive ways for Americans to borrow money today. Fortunately, the number of Americans paying their credit cards month by month has been increasing in recent months, with about 37% not missing their payments. However, there is a 12% who do not pay their credit cards on time or only make minimum payments. But look at the effect this would have and how long it would take to pay off just a $5,000 credit card balance, assuming the current average interest rate of 22%. It would take approximately 281 months or 23 years to pay off your debt, and you would have paid over $8,500 in interest only. Now, there are credit card companies that are very abusive with the average interest rates they charge if you do not make your payments on time. They can charge about 2% of your total outstanding balance. To better understand the magnitude of this, if you have the same $5,000 balance over time, it could become $48,000, which would take you about 106 years to pay off. In other words, you would be paying off that debt for the rest of your life. Now, if you find yourself in this unfortunate situation, here is a guide on what you can do to get out of this tough situation. Step 1. Call your credit card issuer and request a lower annual interest rate. According to a LendingTree survey, around 50% of people who tried this obtained a lower rate. First, call your credit card issuer and ask for a lower annual percentage rate. A LendingTree survey found about three-quarters of consumers who asked for a lower rate in the past year got one. Sometimes, it's as easy as calling the phone number on the back of your credit card and simply asking for a lower interest rate. It may not be significantly lower, but any reduction can help. Step 2. Try to obtain a balance transfer card with a 0% interest rate. Also, try to snag a 0% interest balance transfer card. These cards offer 12, 15, even 20 months with no interest on transfer balances. Once you secure a credit card with a 0% interest rate, you will need to be diligent and aggressive in paying off your credit card balance because you won't be accruing interest. If you have a credit card balance, do it as soon as possible because in September, student loan interest will start to grow again. And in October of this year, in 2023, the first student loan payments will resume. Now, the good news is that there is a new program called the on-ramp leniency program that essentially allows anyone who is behind or has missed payments not to be immediately reported to collection agencies. The bad news is that this program ends on September 30th of 2024. So don't stop making your payments because remember that interest will continue to accrue during that time. Now, even better news is that It's a new program you might not have heard of before this video called the income-driven repayment program. Depending on the size of your family, you can reduce your payments by half or down to zero dollars. And the best part is that you won't accrue interest while you're in this program. However, you have to apply and be accepted. And I've included a link below where you can apply and submit an application. Now, that's the good news. But the bad news is that and credit card debt is just one of the bad records we've broken. There are four more. The United States has also reached a record $17.1 trillion in household debt, a record $12 trillion in mortgage debt, a record $1.6 trillion in auto loans, and a record $1.6 trillion in student loan debt. These are not good records to break. And that's why some economists are telling us that But surprisingly, if you look at something called debt as a percentage of available income, meaning how much Americans are paying in relation to how much they earn, it looks quite good. As you can see in this graph, Americans have available income to pay off their debt if they choose to, despite the fact that the United States has broken all these record levels of debt. Unfortunately, predicting a recession at this point is like flipping a coin. It could go either way. Don't forget to subscribe if you enjoy this type of content. See you next time.