Credit Basics

A one-two punch of rising gasoline prices and climbing interest rates is putting the squeeze on consumers, and the strain is starting to show.

An important measure of consumer financial distress — late payments on credit cards — ticked up in the first quarter this year. According to figures from the American Bankers Association, the percentage of bank cards 30 or more days past due increased 3 percent in the January-March quarter, rising to 4.4 percent of all cards.

Credit-counseling agencies say consumers are increasingly seeking out their services to help manage credit card debt, while keeping up on essentials like gasoline that continue to rise in price. “My phones are going crazy,” said Howard Dvorkin, president of the nonprofit Consolidated Credit Counseling Services, Inc. “Consumers are carrying an exorbitant amount of debt — and they don’t have any savings to fall back on if things don’t go right.”

In its bid to stave off inflation, the Federal Reserve is adding to consumers’ woes. The Fed last week raised short-term interest rates for the 17th consecutive time, making it more expensive to borrow money and likely prompting more delinquencies on credit cards and loans for homes and autos.

With no relief in sight at the gas pump, the burden ultimately falls to consumers to change their spending habits. In times such as this, “want to” items must take a back seat to “have to” purchases like groceries, rent and gas. Consolidation loans through local lenders can help consumers escape the high interest rates that often kick in once payments are late. Reputable credit-counseling agencies are also an option.

Unfortunately, there are no easy solutions. Climbing out of debt can be a years-long process, but it’s far better to start the chore sooner rather than later.