The pandemic has been filled with financial challenges and some turned to credit cards to help keep them afloat.
A recent study from WalletHub estimates Americans paid down $82.9 billion in credit card debt in 2020 alone.
It shows many across the country are paying down their balances and saving more, but it is a trend that may not be carrying on in some parts of South Florida.
The Federal Reserve says credit card debt was $108 billion dollars lower at the end of 2020 than during the same period in 2019.
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Unlike cities where the average household credit card debt went down during the pandemic, WalletHub’s study shows in some cities in South Florida, it either stayed the same or got worse.
According to the study, the average household in Miami had around $13,701 in credit card debt and decreased their balances by just $16.
In Fort Lauderdale, household credit card debt on average increased by $644. In Pembroke Pines, balances increased on average $930.
Syrterrek Jones, a South Florida resident, told NBC 6 he went from having no credit card debt to taking on thousands during the pandemic.
He said he hoped unemployment benefits would help him with his bills after losing his job last year. But he said his claim has been stalled for months and without benefits coming in, he started taking on more debt than he was comfortable with.
“I said, well it will just go into collections and I will pay you when I can pay you,” Jones said. “I was opening up credit cards, making sure I don’t lose anything.”
It’s a reality Jill Gonzalez with WalletHub told NBC 6 so many are facing.
“Keeping a roof over your head, or keeping your utilities on while you were unemployed, all of these things because there might not have been that income, could have been put on credit cards, so now you are faced with paying off those debts and hopefully getting your balances back to zero,” Gonzalez said.
Gonzalez said consumers should be strategic about how they pay off their debt.
“It’s good that you want to pay off your debt, but you really want to be a little more strategic about it,” Gonzalez said.
Gonzalez recommended having a plan to deal with your credit card debt.
One option is what’s known as the “avalanche approach.” This plan encourages you to pay more money toward the cards with the highest interest rate first, while making minimum payments on your other cards.
Another option is the so-called “snowball method.” This plan includes paying off debt by putting more toward the cards with the smallest balances first, while paying the minimum on your other cards.
”So hopefully you can chip away at that, be motivated when you get that back to zero, and then work on your next lowest debt,” Gonzalez said.
You can also consolidate your debt with a personal loan or low interest credit card.
If you have questions about how to tackle your credit card debt, you can also speak with a financial advisor or professional.