Americans Have Long Pursued Debt Relief Post-Holiday, But Now the Struggle Persists Year-Round.

By
Joe Killer
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Getting out of debt was once a staple of New Year resolutions.

Traditionally, the initial quarter of the year witnesses a surge in calls to credit counselors as Americans, overwhelmed by reckless holiday spending or motivated by a “new year, new you” mindset, seek financial guidance.

However, this long-standing pattern appears to be fading. It’s not that borrowers have successfully escaped from debt; rather, they now require assistance throughout the year due to escalating car loans and mounting credit card debt.

“The environment has shifted,” remarked Bruce McClary, spokesperson for the National Foundation for Credit Counseling, to Yahoo Finance. “We’re receiving increasing reports from individuals facing financial pressure all year long.”

Many individuals find themselves trapped in burdensome car loans, while others have leaned on credit cards in recent years to cope with rising grocery and gas prices. As inflation remains a concern, this situation is likely to worsen for many Americans.

According to a recent report by the Federal Reserve Bank of New York, total household debt surged to a record $18.04 trillion in the fourth quarter, primarily driven by an almost 4% increase in credit card balances, which reached an unprecedented $1.21 trillion.

Read more: The top strategies for eliminating credit card debt

Some of the debt increase can be attributed to population growth, while other increases are seasonal. However, the rising rates of severe delinquency, particularly for auto loans and credit cards, are more alarming. The percentage of borrowers 90 days or more late on these debts has reached 14-year highs, indicating a troubling trend.

“I’ve observed a pattern where high auto loan payments are placing significant strain on individuals’ ability to cover living expenses, coupled with an ever-increasing dependence on credit,” said Victor Russell, operations manager at Apprisen, a nonprofit credit counseling organization.

Russell noted that the callers to his agency, which assists distressed Americans nationwide, represent a wide range of income levels. The NY Fed report additionally highlighted that auto loan delinquencies have been rising across various credit score ranges and income brackets.

At CCCS of the Savannah Area Inc. in Georgia, counselors are trying to help an elderly man who struggles to meet both his car payment and soaring auto insurance rates. In January alone, motor vehicle insurance costs rose by 2% from the previous month and nearly 12% year-over-year, according to the latest inflation figures released this week.