Written by Jasir Jawaid
Debt doesn't just affect some Americans, it's a mass affliction. U.S. household debt topped $16 trillion in the second quarter of 2022, with mortgage, auto loan, and credit card balances all registering year-over-year increases, according to the New York Fed. Worryingly, delinquencies have begun to tick up after falling to historic lows during the pandemic as the U.S. government pumped money into the economy.
Record-high inflation is forcing many people, especially low-income individuals, to turn to debt to afford essential daily items. But they soon find out that having a bad credit score and a loan do not mix well. For one, you're not eligible for most loans, and when you are, you'll be paying more in installments over a shorter period, making it more likely for the borrower to become delinquent. Payday loans are an example in this scenario.
Many people have more than one credit card. Indeed, an average U.S. consumer had 3.84 credit card accounts at the end of the third quarter of 2020, Experian data shows. Paying off multiple credit cards, coupled with other forms of debt, can be an overwhelming task. Different due dates can aggravate the situation. But debt-free doesn't just simply involve making monthly payments; that won't get you anywhere, and you'll remain in debt longer.
Some debts take preference over others, and here is a general overview of things to consider when deciding which debt to pay off first.
This article was published on JoyWallet and can be read here in full.