Survey: Demand for credit counseling in Puerto Rico rises by 167%
Credit card debt and inflation are pushing more people in the U.S. and Puerto Rico into financial stress.
A new survey conducted by The Harris Poll on behalf of Money Management International (MMI) reveals that 83% of Americans with credit card debt have struggled to make ends meet this year, with inflation likely playing a major role. In Puerto Rico, the demand for credit counseling has surged by 167% compared to last year.
“We are seeing higher debt balances and household budget deficits among new customers. There is a notable disparity between Puerto Rico and the mainland United States, where the volume of counseling this year is up 42% over last,” said Thomas Nitzsche, MMI’s vice president of public relations told News is my Business.
With the rising cost of living, more people are seeking financial counseling and help managing credit card debt.
“Our customers tell us that inflation and the Fed’s attempts to curb it by raising interest rates,” have contributed to their financial challenges over the last few years, Nitzsche said.
“Lack of affordable housing is also a concern: Homeowners seeking credit counseling in 2024 experience housing costs 36% higher compared to four years ago and carry 21% more unsecured debt than in 2020,” he said.
Renters, he added, are facing rent increases of 44% higher than four years ago, with a 26% rise in unsecured debt.
“Among those seeking credit counseling from MMI prior to March 2022, when the Fed began raising rates, the average debt interest rate was 25.5%, versus 27.8% [annual percentage rate (APR)] this year,” he noted.
Nitzsche highlighted the case of Samuel Nieves, a 61-year-old from Carolina, Puerto Rico, who turned to MMI after retiring early due to reduced income.
“While he is now judgment-proof due to his protected income as a disabled veteran, he wished to repay about $14,000 of debt and improve his credit,” he explained. “We worked with his creditors to lower the interest rates into the single digits, and he’s on track to complete his repayment in five years.”
The survey also found that 73% of Americans with credit card debt cite inflation as one of the most significant pressures on their household budget. The rising cost of essential items, such as groceries and utilities, has increased financial stress for many households.
New customers seeking financial counseling from MMI report an average monthly household budget deficit of nearly $300, a figure that has doubled in the last two years.
