FARMINGTON HILLS, Mich (February 28, 2024) |
GreenPath Financial Wellness, a national nonprofit that provides financial counseling and debt management services, reports an unparalleled increase in calls for counseling help with record-high credit card debt and delinquencies.
GreenPath’s call volume year-to-date is 57 percent higher than in 2022. The nonprofit’s number of completed sessions year-to-date has increased 95 percent versus two years ago.
GreenPath saw a dramatic jump in demand for its debt pay-off program, the Debt Management Program (DMP). Enrollment ballooned 139 percent in January 2024 compared to January 2022. The nonprofit also saw a 33% increase in debt balances among those enrolled. In January 2022, clients enrolled an average debt balance of $16,022 in the Debt Management Program while in January 2024, the average debt balance among clients was $21,337.
Much of the spike in demand can be attributed to high interest rates, record debt levels nationwide, and everyday expenses being more expensive than years prior, despite inflation slowing.
"Everyday expenses are significantly higher than they were pre-pandemic, so people are turning to credit cards to pay for things like groceries and gas," says David Flores, GreenPath’s Director of Client Services. "It is a cycle that is difficult to break. High interest rates and other charges quickly add to their balances. Increased balances lead to an increased monthly payment due. This makes it even more difficult to afford everyday expenses. That’s where credit counseling agencies can help.”
GreenPath’s data echoes a recent New York Fed report indicating total credit card balances in the U.S. have reached $1.13 trillion. Interest rates are at an all-time high as the Federal Reserve increased interest rates 11 times between 2022 and 2024. Credit card delinquency rates for debt over 30 days late rose to 8.5 percent in the fourth quarter of 2023, up from 5.9 percent a year earlier. Lower-income households and younger households are most at risk of falling behind on payments, according to the Fed.
“Interest rates are what made debt payoff seem impossible,” explains GreenPath client Janis Collin.
With a DMP, GreenPath works with creditors to lower interest rates, waive and/or eliminate late fees. More of the payment goes toward the principal balance, clients save money on interest and get out of debt sooner. GreenPath helped more than 65,000 households pay off over $200 million in debt through DMPs.