GREEN BAY, Wis. (WFRV) – The Federal Reserve Bank reports that the last three months of 2021 brought the largest quarterly increase in credit card balances since data first became available 22 years ago.
According to the report, this number increased by 52 billion. People in the United States love their credit cards, but probably don’t like the debt that can come with them if they can’t make their full payments each month.
“I think the most obvious downside of using a credit card is overworking yourself and I think a lot of people have found themselves in those predicaments,” said Mike Macco, president of Macco Financial Group. , Inc. in Green Bay.
Macco said credit cards are good for people who can be disciplined in their spending and make sure they make their payments every month.
“People have to be honest with themselves and if they’re prone to that impulsiveness, they either choose not to have credit cards or they freeze their credit, which is a real barrier, so there are additional steps to take if they want to apply for a credit card,” Macco said.
Not paying your credit card in full each month means interest starts to accrue on your purchases. This is where people start to get in trouble.
He said one of the benefits of using a credit card is that people can bridge the gap between when they actually get paid and when they need to buy things.
At The Salvation Army in Appleton, managers offer resources for customers with questions about their finances. Through a program called “Paths of Hope” customers can learn everything from how to do their taxes to advice on how to avoid credit card debt.
“At first I feel like I have to because how else am I going to pay rent or food, but then you start not being able to make payments anymore,” Knudtson said describing what his customers face.
She said the Salvation Army encourages its customers to be careful with credit card spending.
“You don’t have to go to the grocery store if you put it on your credit card because the Salvation Army has a pantry you can pick up food from,” Knudtson said.
Macco says many people can get out of credit card debt with a little change in their spending habits. For those who can’t, he suggests calling your credit card company, which can usually get them to issue a payment plan. However, he warns that it will impact your credit score.
Filing for bankruptcy is another, obviously undesirable, option that can help someone restructure or clear their debt. Of course, declaring bankruptcy would really hurt a person’s credit rating.