Amna: Welcome to the "Newshour."
Americans received some some
news today on inflation.
The consumer price index rose
6.5% in December compared with a
year ago.
That is down from 7.1% in
November and marks the sixth
consecutive month of falling
inflation rates.
Geoff: But Americans are still
feeling the pinch from
higher-than-usual prices.
And many have been forced to
pull out their credit cards,
even while interest rates on
those cards are soaring.
For a closer look at what this
means, we turn to Michelle
Singletary, journalist and
author of the syndicated
Washington post column "The
color of money."
Welcome to the "Newshour."
More Americans are leaving their
credit cards to deal with rising
prices and as interest rates
continue to climb the debt is
becoming more expensive.
How big of a problem is this,
Michelle?
Michelle: Well, it's a pretty
big problem.
The fed is obviously trying to
fight inflation and that has
resulted in an increase in
credit card rates of up to now
20% on average across the
nation.
So that means that those folks
who are carrying credit card
debt or month to month are
paying a significant more
interest on that debt.
Geoff: In planning to speak with
you, we asked our viewers for
their questions about all this.
Here's one from Philip from
California.
>> Probably my biggest question
would be on debt consolidation
and stuff like that.
What is the best way to go about
it?
What is the best way to
consolidate that debt, because
it feels like there's so much
out there and there's just so
little information of what is
trustworthy, what could work.
Geoff: All right.
So what are some best practices
when it comes to debt
consolidation?
Michelle: So one thing that I
recommend is that before you
consolidate that debt, make sure
that what impacted you having
that is gone.
So if you're going to still be
adding to that, you're just
gonna sweep all that debt on
credit cards, and guess what,
people that end up putting more
on there.
And you also want to make sure
that when you consolidate,
you're not going to, at the end
of the day, pay more if they
stretch it out and the interest
rate might seem lower.
You actually at the end might be
paying more on that credit card
debt.
I would rather you contact your
credit card lender and say, I'm
having trouble.
How can you help me?
You know, lots of people don't
make that call.
And it's understandable.
You thinking, well, I don't have
the money.
They're not going to help me.
But one of the things that
credit card lenders told me is
at people don'call to get
help, and they will help you.
Geoff: For folks whose incomes
haven't kept pace with
inflation, what should they do?
I suppose the easy answer is to
stop using your credit cards,
but for a lot of people they
don't have that luxury.
Michelle: Yeah, I know that
people don't want to hear that
and obviously they're
struggling, but if you can and
you've got a lot of debt on your
card, you must put it away.
That means going back to your
budget, cutting everything you
possibly can.
It may mean changing your where
you live your housing, you know,
perhaps you can move in with
someone or someone can move in
with you, because that's the
biggest impact of people's
budget is their housing.
But the one thing I want you to
do is try not to go to payday
lenders.
Don't try to add on to debt and
an emergency type situation
because oftentimes that ends up
increasing how much you owe.
For example with payday loans,
you get one, then your next
payday comes you got to pay that
loan off and you are already in
the hole.
So again, contact your lenders.
You might look into if your
credit is still good you can see
see if there is any 0% of offers
out there that you qualify for,
transfer the debt to that and
then take that time to pay it
off.
Make sure that you can pay it
off though, in that introductory
period which can be anywhere
from 15 months, or 12 months to
18 months in some cases if
you've got really good credit.
Geoff: So lastly, Michelle,
inflation is slowing.
Is it enough now for the fed to
pull back on these interest rate
hikes?
They've already said that they
are going to still probably
continue to do the rates.
It is slowing but it's not where
they want it to be.
So I think the word for 2023 is
still inflation is gonna be with
us.
That means cut as much as you
can, look at your budget.
And most importantly, if you
can, don't charge up and carry
that credit card debt because
it's going to be so expensive in
this next year or two.
Geoff: Michelle Singletary,
thanks so much for your time and
for your insights.
We appreciate it.
Michelle: Thank you for having