Black Credit Card Debt And Available Options To Eliminate It

Credit card debt has risen despite high interest rates, a sign that many Americans have been relying on credit cards to get them through inflation.

According to the latest numbers from the Federal Reserve Credit Survey, Black Americans carry, on average, $4,360 in credit card debt, the third highest figure by ethnicity, according to available demographic data.

However, along with Latinx Americans, Black Americans share the lowest median credit card debt at $1,700.

According to Motley Fool, credit card debt has risen despite high interest rates, a sign that many Americans have been relying on credit cards to get through inflation.

According to Mark Zandi, chief economist at Moody’s Analytics, that is precisely what occurred.

“They (Americans) used credit card debt to supplement their incomes to maintain their purchasing power,” Zandi told Time Magazine. “Families who turned to credit cards to fill in budget gaps now have higher interest payments.”

Zandi also offered a hopeful outlook, “The good news is card growth has slowed, and lenders have tightened their underwriting. There are some signs that things are starting to stabilize and level off.”

Despite the lower median credit card debt figure, New York Federal Reserve researchers found that Black and Latinx credit card holders were more likely to be delinquent on credit card debt.

However, according to CBS News, there may be a few ways to escape credit card debt through credit card debt forgiveness programs.

Usually, getting credit card debt forgiven involves contacting creditors to settle the debt for less than the original amount owed.

Another option is to work with a debt consolidation or a debt relief company, but there are typically some requirements to be met before that is an option.

Most companies require a minimum of $7,500 in unsecured debt, but that figure varies by company.

If that figure is more than what is owed to a creditor, it is likely your best bet to negotiate directly with the creditor, but if your credit score is good enough, you can also apply for a debt consolidation loan or a balance transfer credit card, which comes with a low (usually 0% APR) introductory interest rate.

In addition, credit counseling agencies can give cardholders budgeting advice and enroll them in a debt management plan that can lower interest rates and consolidate payments.

The last and, in some cases, the most desperate option is to declare bankruptcy, which essentially wipes your debts and gives you a clean slate, but it does damage your credit score and, depending on the type of bankruptcy declaration, can take as long as five years to resolve.

As Black Enterprise previously reported, there are ways to control debts proactively so you don’t have to be in a position where you need debt consolidation services.

One of the best methods is proactively tracking your credit card purchases. Most major credit card companies have systems that allow you to see your balance, so take advantage of that resource so you don’t fall behind on your monthly payments.

Another money management tip is to use a debit card or cash for purchases lower than $50 and only use your credit card for larger purchases. This will allow you to spread the cost over time in more manageable amounts.

According to Beverly Anderson, president of Global Consumer Solutions at Equifax, knowing what you spend and paying what you can are major keys to avoiding credit card debt in the first place.

“A consumer should look at how much they’re making and what they’re spending,” Anderson told CNBC Select, “Knowing exactly where you stand and what you can afford may help you better manage financial commitments.”

Anderson continued, “When a consumer is not able to pay in full, they should pay whatever they can and avoid any late payment as that may not only hurt their credit standing but further increase the interest rate.”