Suze Orman's Worried About This Disturbing Credit Card Trend

A woman looking frustrated with a credit card in her hand while looking at a laptop.

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Could this troubling trend mean bad things for consumers? 

Key points

  • Suze Orman is concerned about the increase in unpaid credit card debt.
  • It's currently an especially bad time to owe money on credit cards.
  • Orman has some tips on what to do if you're in debt, including a balance transfer.

Suze Orman is a personal finance expert who shares her opinion on many money issues. Recently, she expressed concern about a specific credit card trend. She also provided some tips for those affected by the troubling patterns of credit card use that has her worried. 

This credit card trend is cause for concern

In March of this year, Suze Orman commented that she was worried about an increase in unpaid credit card bills. Specifically, she pointed out that in the last quarter of 2021, the biggest quarterly increase in unpaid bills occurred since the New York Federal Reserve started measuring this data. 

When discussing her concerns about this issue, Orman commented that the increase in debt came after a period of time when many households had been successfully reducing their bills. During COVID-19 lockdowns, spending opportunities were limited and stimulus checks offered extra money to many, so people were able to pay down bills. This trend began to reverse, though, and now card balances have rapidly increased.

Orman isn't just worried about the fact people are charging more and not paying it off. She also warned that credit card debt may be more expensive than usual. 

"Right now could be an especially bad time to carry credit card debt," she said." The Federal Reserve is expected to start raising the key interest rate it controls -- the Federal Funds rate -- as part of its strategy to combat the recent rise in the inflation rate. Once the Fed starts to do this, it is likely that credit card issuers will react by raising the interest rate they charge on unpaid balances. And that rate is already plenty high: the average rate is more than 16%."

What should you do if you're in credit card debt

Orman is right to warn that rising credit card debt could be a big problem -- especially as interest rates on cards increase. If more consumers face high credit card bills, this could affect their ability to save and spend going forward. This can affect both individual household finances and the economy as a whole. 

The good news is, she has some tips for those who are carrying a balance and who could get hit with these high interest rates. Specifically, Orman advises those who are currently in credit card debt to avoid any spending on "wants" rather than needs until your debt is gone. She also suggests taking on some side jobs to work your way out of debt. 

For those who are currently facing very high interest rates, there's also another potential strategy that could help reduce debt repayment costs. It involves taking a balance transfer. Orman suggests this for those who have a FICO® Score of 700 or higher who can qualify for a card with a long 0% APR on transferred balances.

If you can take this approach, you can bring your high rate down to 0% for a period of time so your entire payment goes toward reducing the principal balance on your card rather than to high interest rates. 

If you can follow these steps, hopefully you can soon get out of debt so you're no longer one of the many Americans contributing to rising credit card balances that have Orman so troubled. 

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