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Over the last couple of years, most people have been concerned about inflation. What we tend to forget about is the cost of financing. It has always been high but has gotten higher.

Carol pays off our credit cards when the bill comes in. I normally use the debit card to pay for most things. When I was younger and my family lived from pay check to pay check, we only paid a portion of the monthly bill and suffered a significant charge.

In the last ten years, the average Annual Percentage Rate (APR) on credit cards has increased from 12.9% in 2013 to 22.8% in 2023. This is the highest rate since the Federal Reserve started collecting data in 1994. The difference between the Average APR and prime rate has reached an all-time high.

Investopedia states that the medium average credit card interest rate for June 2024 is 24.62% for the 300 companies they track. Locally, one retailer is charging 31.99% purchase APR and 36.99% penalty APR.

My question is, how much is enough? Obviously if you don’t plan and get into too much debt, you’re not going to pay the credit card off. The best bet is to pay in cash and hide the cards. A young family, in a lot of cases, doesn’t perceive any options so they use the credit card.

If you live in Beaufort County, you need a car to get around. From what I can tell, vehicle prices have increased 20 plus percent since 2019. The average new vehicle price in January 2024 was $47,401, a decrease of 2.6% in December. There are still several vehicles that can be bought for less than $30,000.

The average financing rate was 6.73% for new cars and 11.93% for used cars in the first quarter of 2024. The monthly payment on a new $35,000 vehicle with $10,000 down and without fees, sales tax and title would be approximately $491.85 for 60 months. If you’re young and raising a family, $491.85 is a lot of money.

The next thing a young family in Beaufort County needs is a new home. Medium statewide sales price for a home is up more than 50 percent the last four years to $309,677. Buying a house is going to be extremely difficult for a family living and working in Beaufort County. Purchasing a home with a 4% 30-year mortgage saves several hundred dollars a month compared to a 7% financing rate.

Solutions include a continued decline of vehicle prices and a reduction of inflation to 2%. A reduction in the prime rate that eventually stops close to zero is needed to reduce the cost of financing.

Beaufort County needs new smaller lower cost homes and more and better paying jobs. Being a bedroom community to Greenville isn’t bad either. Beaufort County is a wonderful place to visit and live.

The credit card rates need to be investigated. They are, in my opinion, completely out of control. There are several issues our federal government needs to address. Credit card interest rates are just one of many.

Al Klemm is a Washington resident and a former Beaufort County Commissioner.