Struggling to keep up with rising costs? How Chicago-area consumers can get out of debt

NBC 5 Responds Struggling to keep up with rising costs? How Chicago-area consumers can get out of debt As more consumers turn to Buy Now, Pay Later plans and credit cards to cover everyday expenses, experts warn of the risks. By Leigh Lesniak and PJ Randhawa • Published 2 hours ago • Updated 1 hour ago As prices of necessities go up, many Chicago-area residents are having a tough time keeping up with their finances. Standing outside of a Pilsen grocery store, Kat told NBC 5 Responds, “One bag at the grocery store… it's so much more than it should be”. Another shopper said he’s living scarcely because he’s on the edge of poverty. Stream NBC 5 for free, 24/7, wherever you are. WATCH HERE The consumer price index rose 0.4% from September to October, the Labor Department said Tuesday, down from 0.6% the previous month. Gas prices rose 1% from September to October, the government said, a stiff increase but still much lower than in previous months. Gas prices have soared more than 37% from a year ago. Inflation has also been worsened by rampant investment in artificial intelligence infrastructure, which has contributed to higher prices for computer chips, electricity and consumer electronics. Streaming video services have recently gotten more expensive, with Disney raising prices last month for its ad-supported Disney+ and Hulu streaming bundle to $12.49 a month from $11.99. The ad-free version rose by $2.50 to $21.49. The National Consumer Law Center said it's seeing people rely more on "buy now, pay later" payment plans for necessities like groceries and even rent. In a recent, unscientific survey of more than 1,200 Chicago-area viewers, nearly 37% of respondents told NBC Chicago they’ve used BNPL plans in the past year. But spacing out payments on necessities can have its downside. NBC 5 Responds NBC 5 Responds Nov 10 Priced out of their own homes: How rising property taxes are threatening longtime Chicago residents NBC 5 Responds Nov 9 How rising costs are pushing Chicago-area residents to the brink “Many times there are hidden fees and costs that are not disclosed to the consumer, so they don't know that they're actually loans that they're paying back,” said Carla Sanchez Adams with the National Consumer Law Center. “They could be paying back interest, they could be paying back late fees." Spreading out payments for necessities does not solve the underlaying problem of not having enough money to cover rent, she noted. When it comes to credit card debt, more than 61% of NBC Responds viewers nationwide said they’re carrying a credit card balance. Data shows Chicagoans are in the same boat. If your credit card debt is building, there are ways to lower the amount you owe. Options include applying for a 0% balance transfer card. Some offer up to two years of interest-free payments. If you can’t get approved for one of these cards, nonprofit groups like Money Management International offer credit counseling services at little to no cost. They work with creditors to consolidate your debt and lower the interest rate, or APR. According to Lending Tree, the average credit card APR in the United States is between 21% and 23%. “This is more of a structured payment plan,” said Ted Rossman of Money Management International. “You might expect something like a 7% or 8% interest rate over four or five years. We're gonna work with you and your creditors to come up with a plan that works.” According to Rossman, three quarters of people who enter a debt consolidation plan usually pay off the debt within four to five years. Still, the persistence of elevated inflation makes it highly likely that the Fed will raise its key interest rate at its next meeting in December. The Fed increases borrowing costs in an effort to cool spending and bring down inflation. This article tagged under: NBC 5 Responds