Carol O’Rourke, the Executive Director of the Coalition for Debtor Education, appeared on NY1 to talk about credit card debt and the Coalition’s financial education app, NYCMoneySmarts.
According to NerdWallet, households with credit card debt now owe an average of over $15,000. So when do you know it’s a problem?
“It’s a problem if you can’t make a payment that month because as soon as you stop paying on time, the late fees kick in,” says Carol O’Rourke, the Executive Director of the Coalition for Debtor Education – a non-profit housed at Fordham University Law School.
O’Rourke says in many cases, that penalty is applied immediately because due dates tend to have little or no wiggle room.
“If the money is due October 1st, if you don’t pay it October 1st they just put in a 35 dollar fee so that adds up,” she says.
Compounding the problem is a sudden spike in your interest rate with penalty rates hitting as high as 29.9 percent.
“And it’s indefinite,” O’Rourke explais. “They keep that rate indefinitely. So if you can’t pay one month, now your interest rate goes up.”
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The Coalition has also created an app to make financial education fun. Through a series of quizzes and explanations, they hope to give people a better understanding of how things like fees and penalties work and when they are applied.
“And if they are aware of these things, than they can kind of minimize the costs and be better consumers,” O’Rourke says.