Credit card debt combined with student loan debt can put a big strain on people’s budgets, according to a new study by the American Financial Benefits Center (AFBC). They also found that 45% of people are lacking education when it comes to using and managing their credit cards.
The study also found that while people might not have received any credit card education, they are holding their own, with 49% of people carrying less than $5,000 in credit card debt, while just 6% are carrying $20,000 or more in debt. That said, when people have both credit card and student loan debt, even if the credit card debt is small, it can feel out of control.
They point out that it’s important for people to have a well-rounded grasp of all their debt and how to deal with it. “Your financial health depends on a number of things, including student loans and credit card debt,” said Sara Molina, manager at AFBC. “To see so many self-taught credit card users is alarming because, just like student loans, credit cards can affect your financial future.”
Getting expert advice
Getting in touch with a professional to get some advice is something that AFBC recommends people do if they feel like they don’t have enough information on how to deal with their credit cards or manage their debt. This way they can get personalized information rather than having to sort through information that is for everyone.
They also point out that federal income-driven repayment plans (IDRs) may be a viable solution for some consumers who are having a hard time paying down their student loans or believe that paying their student loan debt makes it hard for them to pay off their credit cards. These plans base people’s student loan payments on how much the person makes and how big their family is so that they can manage their debt more easily.
“At AFBC, we have helped our clients apply for IDRs, and we hope they have been able to focus on their other financial goals, whether those entail paying down credit card debt or putting the money aside,” said Molina. “We encourage anyone struggling with federal student loans to look into IDRs.”