If you’re a credit cardholder in the U.S. and feeling the impact of high inflation—you’re in good company. In January, Bankrate.com released a report that found 46% of cardholders carry debt month to month, up from 39% in 2022, with consumers racking up $180 billion in credit card debt last year—an all-time record. With inflation still above 5% for the 12-month period as of March, it’s well above the 2% inflation rate that’s considered healthy. To combat higher-than-average inflation, the Federal Reserve has been hiking interest rates, but that also isn’t going to necessarily help cardholders pay down debt.
How is inflation impacting you?
With the prices of goods and services higher than normal, you might already be putting more on your card while finding less discretionary income to pay your bills. And with the national average of credit card interest rates reaching a high as well, paying down debt is only getting harder.
Get credit counseling
During times like this, credit counseling can help—particularly through a debt management program (DMP), which is a repayment plan for unsecured debts that allows you to condense your payments and pay them off efficiently and affordably.
How does a debt management program work?
When you enroll in a debt management program, your credit counselor will work with your lenders to consolidate your credit cards into one monthly payment and reduce your interest rate—usually between 6%–10%, so you can pay off your loans in three to five years.
Bottom line: Here’s how a Debt Management Program helps fight inflation
While inflation is recovering, it’s still considered high. By reducing your monthly payment and interest rate through a DMP, you can help alleviate the impact of inflation on your credit cards and credit score, so that when the economy recovers, you’ll be in a more financially stable position.