Farmington Hills, Michigan--(Newsfile Corp. - June 13, 2024) - The Federal Reserve recently announced the decision to maintain its current interest rates. This move all but ensures credit card interest rates will remain at record highs.
Credit card interest rates are typically influenced by the Federal Reserve's rate, yet there are additional factors at play. Lenders set these rates by considering not only the Federal Reserve's benchmark but also the type of credit involved, the borrower's credit score, and their payment history.
Detailed analysis of GreenPath Financial Wellness client data reveals that the average interest rate for individuals before enrolling in a Debt Management Program (DMP) stands at an alarming 28%. This figure surpasses most nationally reported average credit card interest rates, including the Federal Reserve's average of 22.63%1.
"Our findings indicate that, before the Debt Management Program, our clients were experiencing even higher rates than the national average," said Sarah Fouquart, Business Intelligence Analyst at GreenPath. "For these individuals, paying down debt becomes even harder."
Client debt balances prior to DMP enrollment equated to $15,628 on average. Analysis considered pre-enrollment conditions, including a 28% average interest rate, and determined a payoff timeline of 121 months (10+ years) and an average total interest paid of $27,581.
Further analysis highlighted the savings benefits of a DMP. Post-enrollment, the average client's credit card interest rate dropped to 7.3%. This significant decrease reduces payoff time and overall debt cost: on average, DMP clients experience a monthly payment reduction of $161, save $25,327 in interest, and eliminate debt six years sooner.
High credit card interest rates underscore the importance of financial management. A DMP aims to provide much-needed relief by negotiating lower interest rates and structuring repayment plans, offering a viable pathway out of debt.
"Our goal is to help clients regain confidence in their financial situation and work towards a debt-free future," added Fouquart. "With interest rates at record highs, now more than ever, people are looking for effective debt management solutions."
For more information about managing high interest rates using GreenPath Financial Wellness' Debt Management Program, please visit greenpath.com or call (866) 648-8122.
Media Contact:
Kathryn Ellywicz
koleszkowicz@greenpath.com
1 Federal Reserve Board. "Consumer Credit - G.19." Federal Reserve, 7 June 2024, https://www.federalreserve.gov/releases/g19/current/default.htm. Accessed 11 June 2024.
To view the source version of this press release, please visit https://www.newsfilecorp.com/release/212718
