Inflation hitting hard for Americans trying to pay down debt

Credit card issuers charged $12 billion in late payment penalties in 2020, while average total debt per person rose the following year.

SEATTLE — From gas to groceries, families in western Washington and across the country are being forced to stretch their dollars.

The annual inflation rate for the United States is 8.6% for the 12 months ended May 2022, the largest annual increase since December 1981 and after previously rising 8.3%, according to data released June 10 by the U.S. Ministry of Labour.

Rising inflation is only part of the current challenge facing Americans. Credit card issuers levied $12 billion in late fees in 2020, according to a report by the Consumer Financial Protection Bureau (CFPB).

Credit card late fees and interest add to consumer debt, but according to Experian — mortgages and auto loans, by far the two largest components of consumer budgets, have seen the fastest annual growth of any debt category. Experian’s report for the third quarter of 2021 showed that consumer debt rose 5.4% to $15.31 trillion, up $772 billion from 2020.

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“During the pandemic, people were able to use the extra money they may have received to make sure they keep up with their payments and worked to get out of debt,” said Becky House, the Seattle-based director for strategic initiatives for American financial solutions. “Well, that’s over. They fight. We’re seeing the gas prices going up, the food prices going up, really taking a toll on the incomes of the people who have to make those payments.”

Missing payments can drastically affect a person’s credit score, according to House, who said a personal budget check needs to be done to get anyone back on track.

If needed, House recommends seeking professional debt management help, which is available for free from several nonprofit agencies. Inflation hitting hard for Americans trying to pay down debt

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