Expert expects ‘credit card debt explosion’ ahead of vacation – CBS Miami
MIAMI (CBSMiami) – In Florida, the average credit card balance is just over $ 5,500 and experts say we risk creating more debt.
“We are going to see an explosion in credit card debt,” said Deanne Butchey, professor in the FIU’s finance department.
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Many people have benefited from stimulus funds, child care funds and other government programs, but those safety nets are ending or have ended.
Butchey told CBSMiami: “The problem is, if you had savings, if you had stimulus money or tax credits, that was good, but very quickly that money ran out. So unfortunately people are going to accumulate this credit card debt. “
Americans owe $ 807 billion on nearly 506 million card accounts.
The median debt per American family is $ 2,700, while the average debt is $ 6,270. This figure of $ 5,500 for Florida’s debt puts us ninth in the country.
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“We have to recognize that the stimulus money has dried up. people need to finance their lifestyle and they probably will with credit card debt, ”Butchey said.
Then there’s inflation, which has driven prices up and we’re entering the holiday season, where plastic often flies in line.
“The wonderful thing about Prime is that you spend $ 10 today, and tomorrow you spend an additional $ 10, those dollars add up. Add up on your credit card where the average credit card rate – compounded daily – is 18 and a quarter percent, which is very high when you compare it to auto loans and home loans.
A monthly credit card balance can quickly get out of hand.
“People forget that credit card debt is extremely expensive,” Butchey said.
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The good news is that people typically pay off their credit card debt, and the spike in delinquency that some analysts feared at the start of the pandemic has yet to materialize.