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Why more consumers are being weighed down by debt

With U.S. credit card debt surpassing the $1 trillion mark last year, more consumers are feeling the strain on their wallets.

But while there have been reports of Americans spending big over the summer on things they enjoy, like travel, concerts and dining out, they aren’t necessarily racking up debt due to impulse purchases.

Around 43% of those in debt are actually carrying an outstanding balance due to an unexpected or emergency expense, such as medical bills, car repairs or home repairs, according to Bankrate. This could also back a wider trend around the savings rate receding and more folks living paycheck to paycheck.

Another survey from Forbes Advisor reveals that more than 4 in 10 respondents have nothing left over from their paychecks after covering their expenses — and a stunning 77% report not having enough money in emergency savings to cover one month’s expenses.

Many Americans are being driven into debt by their emergency costs because they don’t have enough money banked in their savings — but here’s what you can do to prevent this from happening.

Kiss Your Credit Card Debt Goodbye

Millions of Americans are struggling to crawl out of debt in the face of record-high interest rates. A personal loan offers lower interest rates and fixed payments, making it a smart choice to consolidate high-interest credit card debt. It helps save money, simplifies payments, and accelerates debt payoff. Credible is a free online service that shows you the best lending options to pay off your credit card debt fast — and save a ton in interest.

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Budget for your expenses

Your groceries and gas might be taking up too much of your income to consider setting any aside — but it can be helpful to start recording your monthly expenses in an Excel spreadsheet or an app and budget for your needs.

Look for easy ways to cut costs, like getting rid of that gym membership or streaming service subscription you never use, or shopping around for a cheaper insurance rate on your car.

If you’re looking for a more tangible method of managing your money, you could even try the cash stuffing hack and take your paycheck in cash and divide it into different envelopes based on each spending category to prevent you from overspending. You can include designated envelopes for your savings and even discretionary purchases.

Pay off your debt

Paying off your monthly credit card balance is crucial if you want to avoid racking up more interest and debt — but the reality is that millions of Americans are carrying their balances forward.

If you want to get yourself out of that cycle, try the avalanche method, where you start with your highest interest debt, while making the minimum payments on your other credit cards or loans.

You can also try calling up your credit card issuer and ask for a lower interest rate. Keep in mind that you’re more likely to get approved if you have a history of on-time payments and a strong credit score to back you up.

Or, consider credit counseling, so a professional can evaluate your situation and put you on a personalized debt management plan.

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Build a rainy day fund

Handling an unexpected or emergency expense isn’t so bad when you’ve got some savings set aside to cover it.

While most experts recommend keeping three to six months’ worth of expenses in a savings account, if that seems like too lofty a goal, just start with small amounts at a time.

Perhaps it’s easier for you to start with saving $10 each month, or $100, while you work your way up at a pace that’s still manageable for your financial situation.

You can also consider opening a high-yield savings account, which could come with an interest rate higher than 5%, compared to the average savings account rate of 0.46%.


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There’s no reason not to at least try this free service. Check out BestMoney today, and take a turn in the right direction.

Serah Louis is a reporter with Moneywise.com. She enjoys tackling topical personal finance issues for young people and women and covering the latest in financial news.


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