Credit card debt hits record $1 trillion, young adults have highest delinquencies
Houston - Credit card debt has reached new highs, hitting a record $1.08 trillion nationwide. Young adults are experiencing the most delinquent payments.
Federal Reserve data shows the average credit card interest rate is 21%, while Transunion reports borrowers have an average of more than $6,000 in credit card debt.
"I wasn't enjoying life anymore. You know, I wasn't happy about where I was. I wasn't happy with my credit score," said Regine Denerville.
Denerville says she struggled to find a job after graduating from college in 2008 and gradually built up $20,000 in credit card debt.
"What happened was everything became a necessity, not just eating out, but going traveling with friends to cities, and going to parties," Denerville tells us.
She turned to non-profit credit counseling agency Money Management International, which helped her set a budget and pay it all off in three years.
MMI says it's currently experiencing a 33% increase in consumers reaching out for help with credit card debt over this time last year, and the total amount of debt that they have is climbing.
"That's up from about $20,000 at the beginning of last year to almost $30,000 now," said Thomas Nitzsche with Money Management International.
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Nitzsche says that's often on top of higher mortgage and auto loan debt, and the resumption of federal student loan payments. He says their most common clients have shifted from being middle-aged to young adults.
"It typically just starts with a budget shortfall, right? Like they're just simply not making enough to make ends meet, which again, makes sense if you're earlier in your career," explained Nitzsche.
File photo. (Photo By Jeremy Drey/MediaNews Group/Reading Eagle via Getty Images)
MMI credit counselors work with creditors to reduce the total amount owed and the interest rates, and say they can usually help borrowers pay off the debt in three to four years.
"Whether you work with the creditor directly or through a nonprofit credit counseling agency, they're often willing to reduce the interest rates sometimes really substantially, as low in some cases as 0%," said Nitzsche.
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Regine says she avoids debt now, saving up first for purchases.
"I stick to my budget of what is actually necessary. It really helped. I had goals that I looked at every single day. I said I'm slowly getting to my goals," said Denerville.
Here are some steps that can help borrowers pay off credit card debt:
Transfer the debt to a 0% balance transfer card.
Ask your lender to reduce your interest rate. LendingTree reports that 76% of people who ask for a lower rate are successful, receiving an average reduction of 6%.
Offer to settle the debt for a lower amount if you can pay the sum at one time.
Seek help from non-profit credit counselor through the National Foundation for Credit Counseling.