THE BARE STORY
High household expenses and borrowing costs are adding pressure for people managing debt, with missed payments potentially resulting in fees, added interest and damage to credit histories.
A survey of 1,800 Americans with at least $10,000 in unsecured debt, conducted by Freedom Debt Relief, found that 28% said they could afford only minimum payments and 20% said they were behind on at least one account. The survey also found that 41% had stopped dining out or ordering delivery, while 40% had reduced nonessential online shopping.
Borrowers can assess repayment options by subtracting essential expenses from take-home income and setting an amount available for debt payments. Two commonly used approaches are paying off the highest-interest balances first or targeting smaller balances first. Keeping room in a budget for unexpected costs may reduce reliance on additional credit.
People who miss payments can contact creditors about possible fee waivers, extensions or hardship programs. Paying before an account becomes 30 days overdue can help avoid credit-report consequences. Other options cited for borrowers with unaffordable balances include credit counseling, debt consolidation, balance-transfer offers and debt settlement programs.
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