Managing costly debt becomes top priority

2 min read

Managing costly debt becomes top priority

Consumer credit card debt in the U.S. is at an all-time high and continues rising as households attempt to manage higher prices. The problem of credit card debt is made worse by rising borrowing costs: the average credit card APR sits around 20% – also a record high.

As of the fourth quarter of 2022, U.S. credit card debt totals more than $986 billion, according to Lending Tree. The average American cardholder with an unpaid balance owes $7,279 in credit card, bank card and retail card debt.

Credit card usage is well beyond pre-pandemic levels. After dipping in 2020, the average household’s credit card balance has risen beyond what many experts feel is sustainable.

As a result, delinquencies are on the rise, according to TransUnion. Defined as a payment that’s more than 60 days overdue, delinquencies can signal a crisis in American households to keep up with their own spending.

Some borrowers may be turning to desperate measures, like getting a second job or selling their clothing, furniture, and other items to afford credit card payments. These options may not be sustainable or substantial enough to dig individuals out of their debts.

Some refer to today’s consumer debts as a storm, a cliff or a breaking point – and, indeed, the combination of higher interest rates and higher prices has put many American families in a challenging financial position.

Now more than ever, people need clear debt management insights to create a plan for repayment. This might involve prioritizing the debt with the highest interest rate or some borrowers may be better off repaying smaller debts first to build momentum toward their goal.

But proper debt management must also involve a reflection on how this debt was accumulated and a review of the lifestyle changes that must be made to prevent erratic spending going forward. Through tools like nudge’s budgeting planner, your people can get personalized insights into their own expenses, adjust spending as necessary and achieve financial wellness with a thoughtful plan going forward.

Get in touch and find how nudge can guide your people through this global debt crisis.

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The nudge solution uses insights from behavioral psychology – nudge theory – to increase the likelihood of positive outcomes for our users.

It’s about how and when you present options – delivering the right content to the right person at the right time – for all the right reasons.

So they can make the right decisions and improve their financial wellbeing.

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