Credit Counseling When 1 in 4 Americans Have More Debt Than Savings

Jeanne McTaggartCredit Counseling

Credit Counseling

A new survey released by Bankrate.com draws attention to the need for credit counseling. About half of Americans have more in savings than they have in credit card debt. In 2015, 58 percent of people had more in savings than credit card debt. In 2016, it’s only 52 percent of Americans who have more in an emergency fund. More troubling is the fact that 1 on 4 have more credit card debt than savings. The study cited by a Fortune article also revealed 21 percent of people have no debt and no savings, which is also problematic. By receiving credit counseling, you learn to improve your credit score as well as budget, save and plan.

Covering unexpected expenses

If you have a credit card with a low balance, you can access credit in an emergency. At the same time, a person who has a substantial savings fund doesn’t need to worry. With money in savings, you can use a credit card for convenience with no worries about paying off the balance later. According to the Bankrate.com study, 38 percent of people can cover an emergency expense of between $500 and $1,000.

Lowering your interest rate

If you ran up credit card debt because of a series of emergencies outside your control, the good news is a credit counselor can help. By consolidating credit card debt and signing up for a debt management plan, you often dramatically lower the interest rate you pay. Having a lower interest rate makes paying off credit card debt more feasible. As far as what got you into the situation in the first place, realize you are not alone. Many people struggle with temporary unemployment, medical bills and family problems that make it difficult to budget.

Automating your savings

Experts suggest automating your savings, but it is also smart to set up automatic bill pay. When you enroll in a debt management plan, you have that option to have money automatically deducted out of your account to pay a monthly debt repayment bill. When it comes to how much you should save, look at your expenses including the debt repayment bill. If you can save up three to six months of living expenses, you are doing well. However, it is up to you how long it takes you to save up. With credit counseling, you have a trained professional helping you figure out your financial situation.

At Christian Credit Counselors, we know you can make your savings grow faster if you aren’t throwing money away with high interest charges on credit cards. For more information about boosting your credit score and improving your personal finances, please contact us.

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