Americans’ monthly debt bills are smaller than they were during the height of the COVID-19 pandemic despite high inflation and rising costs, according to Experian.
The credit reporting company wrote in a blog post that “monthly payments overall remain lower than during the pandemic.” The average monthly debt payment for Americans in June was $1,014, $31 less than the average amount paid during the pandemic.
That decrease was due to smaller credit card debt payments, which averaged $169 in June compared to $203 in March 2020. However, auto and mortgage loans saw monthly payments increase in June by comparison with 2020.
“Credit card balances declined immediately at the start of the pandemic as consumers stopped spending partially or completely on many goods and services,” Experian said. “This reduction in spending, as well as help from the government in the form of stimulus checks and other benefits, helped bank balances grow.”
If you’re considering a personal loan to help pay off your credit card debt, it’s essential to shop around for the lowest interest rate possible. You can visit Credible to compare personal loan rates for free without affecting your credit score.
THIS IS WHY YOU SHOULD HAVE MORE THAN ONE CREDIT CARD
Debt payments are lower than in the pandemic, but trending upward
Nationwide, the average minimum credit card and loan payments a consumer pays each month increased annually in June, according to Experian.
Average monthly payments for credit cards, mortgages, and auto loans increased relative to what consumers paid in June 2021, with the largest increase on record coming from mortgage payments, which increased by $65.
“The rise in average monthly mortgage payments shouldn’t come as a surprise either, as consumers scrambled to buy what inventory was left as new home construction all but ground to a halt during the pandemic,” Experian said. “However, the vast majority of these mortgages were financed before mortgage rates began to rise in late 2021, indicating more that price increases, not higher mortgage rates, drove most of the increase.” .
Experian also noted that most types of loans — auto loans, mortgages, and personal loans — are typically fixed-rate and not directly affected by Federal Reserve interest rate increases during your repayment term. However, credit cards are typically issued with variable rates, so rising interest rates could ultimately affect the minimum monthly payments consumers must make.
Personal loan rates vary considerably based on credit score and loan term. If you’re curious about what kind of personal loan rates you may qualify for, you can use an online tool like Credible to compare options from different private lenders without affecting your credit score.
4 REASONS TO TAKE A PERSONAL LOAN FOR DEBT CONSOLIDATION
Consumers often rely on credit cards to pay for essentials
Consumers often used their credit cards to pay for gas and groceries in June, especially if they earned rewards like cash, points or airline miles, according to Experian.
a recent wells fargo study He said that 71% of Americans have rewards credit cards.
Nearly half of those cardholders have used these earned benefits to help offset the price of some everyday expenses. And two-thirds (65%) said they care about credit card rewards more than ever, according to the study.
If you’re looking to cut back on expenses, you might consider using a personal loan to help pay off high-interest debt at a lower rate, saving you money each month. You can visit Credible to find your personalized interest rate today.
UNSECURED PERSONAL LOAN BALANCES FROM CREDIT UNIONS INCREASE: REPORT
Do you have a finance-related question, but don’t know who to ask? Email The Credible Money Expert at [email protected] and your question might be answered by Credible in our Money Expert column.