SAVANNAH, Ga. (WSAV) – Richard Reeve says he gets nervous about rising credit card debt.
“It’s higher than it’s been in a long time,” he tells News 3.
A new report from CreditCards.com says more people are using credit cards again and carrying higher balances. It says some people are using credit cards to purchase clothes or pay for vacations.
Despite card offers that provide points or perks, Reeve says it’s still a good idea to pay balances off in full every month.
“I just caution people that the idea behind a credit card is it’s a 30-day interest-free loan,” said Reeve. “If you don’t pay that off right away when the interest kicks in you’re going to pay a lot more than the sticker price of whatever you purchased.”
He says the average interest rate on a credit card is now is as much as 18 percent. A decade ago during the financial crisis, many people seemed to be scared into making changes with their finances.
“I would say five years ago it was almost cool to be thrifty and say hey I’m doing this I’m cutting back,” says Reeve. “Now it seems to be okay to buy and spend money.”
He says some people may be able to carry higher balances and pay them off eventually but others may just continue to add to their debt. “And then that will catch up with us and we (as a nation) may be right where we were ten years ago,” he added.
Reeve’s advice is something not every consumer may want to hear.
“I would say the number one first step is hey if I’ve got credit cards and I’m not able to pay the full balance immediately stop using the cards,” he said. “In the medical profession stop the bleeding is the number one priority. It’s the same thing with debt so we can’t keep increasing it.”