Credit Card Debt Survey Interview with KNX Radio Los Angeles
CreditCards.com Senior Industry Analyst Matt Schulz spoke on Monday, July 27, 2015, with Chris Sedens and Linda Nunez of KNX Radio Los Angeles about the July 2015 Credit Card Debt survey. The interview and transcript are below.
Chris Sedens: Los Angeles has the nation’s ninth highest credit card debt burden, but there’s a way that you can be debt free in just over a year, if you’re willing to put in a little hard work that’s necessary to do that. Joining us with details to talk about this is Bankrate.com Senior Analyst Matt Schulz. Matt, how much debt does the average person in Los Angeles actually carry and how much would it cost them to become debt free?
Matt Schulz: The average credit card balance for someone in L.A. is about $4,400. And the way we looked at it, if they devote 15% of their income to paying off that debt, which is what credit counselors often recommend, it would take them about 13 months and about $323 in interest to do so. So that’s a long time and a lot of money.
Linda Nunez: One of the interesting things that we talked about this morning amongst ourselves was that, that 15% – I know that’s a rule of thumb by some credit counselors, but where did they come from and is that 15% realistic? Is that too high, too low or what?
Schulz: Well, that’s one of the kind of x factors in this survey because when you factor in things like housing and all those sorts of things, then it probably gets a lot harder for someone in Los Angeles or San Francisco or New York to get to that 15% amount than maybe for someone in San Antonio or Dallas. So regardless, even if you can’t pay 15%, pay more than the minimum otherwise you can get yourself in trouble.
Sedens: Ok, so you say 15% with the average being $4,400 that the typical person – what if you have significantly more debt than that? Should you go up higher, should you go closer to maybe 18, 20%?
Schulz: Well, job number one for any cardholder is to pay off your balance as soon as you can. And what I used to do, in my own personal experience, is that you pay off all of the bills that you can, set a little bit aside, then devote as much as you can toward getting rid of that credit card debt, especially if you have a high interest rate.
Sedens: Do people get themselves in trouble when, you know they get all kinds of credit card offers in the mail, to get a new credit card, pay off one, and start a new credit card?
Schulz: There’s a whole lot of different reasons why people get in trouble. Some do just because they get tempted by too many cards, some people lose their job and use credit cards to fall back, some of them had medical emergencies – there are any number of reasons why people get into trouble.
Sedens: But I wonder can that ever work though for you? Can you get a different card with maybe a better rate and help in that regard?
Schulz: Oh yeah no question. You can certainly go to a site like CreditCards.com and look for a balance transfer card, but then it can also work where you can call your credit card issuer and ask them to reduce your rate. And I think people would be surprised with just how often that works.
Sedens: Ok. Thanks for the advice. Again that is Matt Schulz. He is the Senior Analyst with Bankrate.com.