Household debt crisis looms as consumers struggle with 'unmanageable debt,' report says
AUSTIN (KXAN) — As the tariff trade war continues, so does the fear of a possible recession.
The Federal Reserve Bank of New York reports that the total household debt increased to $18.04 trillion.
A survey by Experian found many consumers are struggling with unimaginable debt, “meaning they have debts that they can’t afford to repay or that are so large that it’s preventing them from paying for basic necessities, things like groceries or housing,” Rod Griffin, the senior director of consumer education and advocacy at Experian, said.
Experts point to auto, medical and credit card debt as contributing factors.
“The other kind of definition that we hear from people is unmanageable debt. They’re making those payments on time but they’re the minimum payments, and as a result, their debts are continuing to grow,” Griffin said.
Griffin suggests another method for paying off debt that may be more rewarding.
“You focus on the highest credit card debt with the highest interest rate, pay it down over time, a little at a time, and eventually use those payments toward other debts,” Griffin said.
However, Griffin believes that strategy may create more frustration because it’s more of a long-term approach.
“There’s something we call the snowball method, where you start with the smallest debt on your credit cards, lowest interest rate, pay that off, and you can do that quickly. It gives you motivation, sense of success, and you roll that into the next bill and you keep moving,” Griffin said. “It helps you feel motivated and stay the course, that’s going to be really helpful.”
