LITTLE ROCK, Ark. — The COVID-19 pandemic had an impact across the world, and it affected people in many different aspects of their lives, including their budgets.
“There was definitely a lot more concern about the future, the direction,” said Financial Advisor, Eric Stoffel.
Stoffel explained that inflation added to the stress, and left some people looking for another way to pay their bills, like credit cards.
“Maybe there's a short-term job loss, and real bills are due and if the money's not in the bank, it still needs to be taken care of,” said Stoffel.
State Economic Forecaster at the Arkansas Economic Development Institute, Michael Pakko, described how inflation has been impacting the interest rate on those cards.
“So, they've increased over the course of this year, just from the beginning of this year, until just a couple of weeks ago, by about 2.4%,” said Pakko.
Pakko also said there's a chance that won't be changing anytime soon.
“I think it's quite likely the credit card increase interest rates will continue to increase over the next several months,” he said.
For those who have been thinking about getting an extra credit card to check items off of their holiday shopping lists, Stoffel said you should consider if it will help or hurt you in the long run.
“When you compound 8%, inflation 16 and a half percent interest on that you're talking north of 25% extra cost to buy that gift for somebody,” said Stoffel.
Stoffel also added that evaluating your finances is key before you go and make any big decisions
“The next three to four years, potentially, for some people to pay back that consumer credit debt is a little bit difficult, and you want to be a little bit cautious right now,” said Stoffel.
He said having a game plan for after is just as important.
“Once you spend that credit card money that is incurred. And now you're in that situation moving forward,” Stoffel explained.