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It’s Money Monday last week, CNN reported US credit card debt has hit an all time high of $1 trillion. Americans owe more in credit card debt than ever in U.S. history. Our money expert Jini Thornton is here to explain what’s happening and to advise us on how to handle our credit card balances.
GUMEC:
All right, let’s jump right in. And what is happening with these credit cards? What we doing, girl?
JINI:
Well, I want to make sure everyone understands that you did say a trillion with a T that was not a billion with a B. And this is the first time ever in U.S. history. But of course this is all related to inflation. We’ve been talking about inflation for a while, but because of inflation, interest rates are going up and credit card interest rates are at all time high. So right now the average credit card interest rate is around 20%, which is crazy. Last year, this time it was only 16%. So bottom line what that means, it is taking people longer to pay off their debt. The people who will maintain credit card balances, and obviously it’s costing them more when they do that.
GUMEC:
What are some techniques to paying off credit card balances faster?
JINI:
Well, first of all, we have to try not to use Our cards at all. So that’s goal #1 after you’re in a position where you don’t have to use it to live anymore, then you can take two different approaches, one people, a lot of people are familiar with what’s called the snowball method, meaning that you’re going to pay off the balance. You’re going to pay off your Smallest balance first.
Or you can go with the Avalanche method, which means you’re going to pay off the balance that has the highest interest rate first. So which one do I think you should use? Whichever One works for your life and your lifestyle.
GUMEC:
I don’t want to sound crazy, but if your credit card interest rate is high, can you ask your credit card company to lower your interest rate? If you are really nice?
JINI:
Well, you have to be real nice, but you also need to be Real prepared and yes, you can actually ask. Not saying that you’re going to get it, but this is how you actually prepare for that credit for that call. Number one, please know your credit score. Know your payment history, know your current interest rate, and also know how long you’ve been a customer. The person who answers the phone does not have the authority to make that decision, so you want to immediately.
Ask for a supervisor, but you also want to know what their competitors are charging interest rate wise. But you can certainly ask my guarantee that you’re going to get it, but why not ask?
GUMEC:
Alright, what should someone do if They can’t make their credit card payments on time?
JINI:
Communication is really Important like you really need to notify your creditors in advance. I don’t care who your creditor is. There is one foundation that I do recommend people talk to whichisnfcc.org National Foundation for credit counseling, and they can help you with debt and credit counseling.
GUMEC:
We’re talking to financial expert Jannah Thornton. How can our listeners get more financial tips and follow you on social media?
JINI:
You can follow me at Janai Thornton. That’s JINI THORNTON. And ladies, you can join my free money community at thankmelater.money
GUMEC:
Very nice. What final message would you leave with us today?
JINI:
It’s the last point, Erica, that we just said, if you’re behind, please communicate with your creditors. Don’t wait till your own story. Pay as much as you can, but please don’t ever be afraid to talk to your crew.
GUMEC:
OK, I want to add this question in there. No, we didn’t have it listed, but is there a good way to use credit? What is credit good for?
JINI:
You know what I I’m a fan of using my credit card, particularly for those of us who travel a lot like you, who are accumulating all of those points. The key is, is to paying the balance off every month. That’s the key you can use them, I encourage people to use them who can use them responsibly. But you have to be able to train yourself to pay that full balance every single month.
