U.S. consumers’ credit card balances rose 7% in the fourth quarter of 2022 and a recent report from the New York Federal Reserve shows overall credit card debt hit a new high of $986 billion.
The rising numbers are a sign people could be struggling to keep up with bills and spending habits amid inflation, according to financial experts.
CBS 6 spoke with Troy based financial advisor Dennis Fagan of Fagan Associates to find out ways families can try to mitigate long term financial strain and crisis. Fagan said while it seems inflation is moving in the right direction, people need to accept some of the higher costs of living are here to stay.
Fagan notes that unemployment rates are at the lowest level in decades. The latest numbers out from the U.S. Department of Labor show unemployment is at 3.4%, with more than half a million jobs created in January.
Fagan says it’s a great time for people looking to make more money to cover basic costs to look for a new job that pays more.
Other tips Fagan says can help save money include carpooling, shopping smarter, and consolidating credit cards into a lower interest rate card.
While Fagan says he would normally not recommend touching your 401K savings, times like these might make it necessary for some people. A 401k loan could provide immediate help with daily expenses but Fagan says consumers need to be careful not to take the loan to pay off debts only to turn around and put more on the cards or accounts you just paid off.
Another option to increase cash flow Fagan says is to temporarily lower your contribution to your 401k, but don’t stop it altogether.