Experts issue warnings to credit card users as debt hits record $1.14 trillion

With inflation and the increased cost of living, Ryan Torres has struggled to pay his bills.

“Groceries and rent were my two biggest ones,” said Torres. “Grocery bills were through the roof. I have two kids, so that was expensive.”

The father and teacher has used his credit card to help bridge the gap.

“I had to get a new washer and dryer, that was my first big one,” said Torres. “I put a couple months of rent on there. It just snowballed from there.”

His credit card debt ballooned to $12,000 in 2021.

“It has just gotten out of hand,” said Torres. “Your mental health takes such a hit when you see those credit card bills come in and you think I’m never going to be able to pay this off and I’m going to be in debt for the rest of my life.”

WRTV

A new report reveals Americans now have a whopping $1.14 trillion in credit card debt, which is a 5.8% increase from just a year ago.

Torres contacted Money Management International , a nonprofit that helps people get out of debt.

“Honestly I was really embarrassed to call,” said Torres. “It's not an easy thing to admit you've dug yourself into a hole, but I needed help. It was either that or bankruptcy and I wasn't willing to do that."

Money Market International has traditionally served low-income clients, but they’re seeing a big shift.

“Now almost half of our clients are solidly middle-class Americans,” said Thomas Nitzsche, senior director of media and brand at Money Management International. “Wages have not kept up with inflation and folks are really relying on the plastic to see their way through.”

Kenney, Kara

People in desperate situations can take desperate measures, like falling for scams and ripoffs.

The Better Business Bureau and the FTC say you should look for red flags like:

• People or companies texting, calling or emailing you out of the blue
• Promising quick fixes
• Trying to gain access to your banking information
• Claiming to be with a “new government program”
• Asking you to pay fees up front

Last year, the Federal Trade Commission settled a lawsuit with a Florida-based telemarketing company that charged consumers nearly $4,000 for their debt-relief services.

"It's illegal to charge any fees up front so make sure if you’re working with an organization that you’re making sure that progress is being made,” said Nitzsche. “Really just do your homework. I’ve had clients where if they had just done a simple Google search they would have seen other complaints who were scammed by an organization.”

Money Management International helps clients by working with creditors to reduce your interest rates and find monthly payments that fit your budget.

“We are going to make recommendations based on where you’re at and try to maintain your good credit standing,” said Nitzsche. “Whereas a debt settlement company, that’s not their priority. They’re just trying to make the sale and trying to get the debt settled.”

Ryan Torres has been paying $750 per month. and is now out of debt.

Scripps National

“It’s amazing,” said Torres. “It’s such a good feeling knowing I worked my way out.”

BBB Tips for resolving debt or credit problems:

• Know your rights when it comes to debt collection: There are laws and regulations that regulate how companies can collect debt and how they can contact you.
• Don’t pay or provide payment information until service is rendered by debt relief and credit repair companies. A 2010 FTC rule prohibits charging upfront fees.
• Don’t fall for promises of quick fixes: Critically examine any guarantee made. Few, if any, companies can ensure a credit or debt company will agree to negotiate with them or adjust reports.
• See if you can help yourself: If you are in default, call debt holders yourself and attempt to negotiate a lower debt payment.
• Be vigilant: Check monthly bank statements to avoid recurring charges from companies.

How to report:

• To register a complaint or post a review with Better Business Bureau (BBB) - BBB.org
• To file a scam report with BBB - BBB.org/ScamTracker
• Federal Trade Commission (FTC) - ReportFraud.ftc.gov

This story was originally published by Kara Kenney at Scripps News Indianapolis .