Factors That Could Affect Your Debt — and What You Can Do

In 2025, Americans are making reducing debt their top financial priority, according to the Debt and New Year’s Resolutions Report from the CFP Board of Standards.

Household debt is currently at a record high, with delinquencies on the rise. This, coupled with policy changes under a new presidential administration, is creating financial uncertainty for many consumers.

Bruce McClary, senior vice president of membership and communications at the National Foundation for Credit Counseling, raises the question of what economic conditions will impact consumers’ ability to reduce their debt.

Experts suggest that tariffs, interest rates, the future of the Consumer Financial Protection Bureau, and tax returns will play significant roles in shaping consumers’ debt management strategies in the near future.

Recent tariffs imposed by President Donald Trump have led to retaliatory measures from other countries, potentially resulting in increased prices for various goods and services.

Kimberly Watkins, an assistant professor at the University of Georgia, highlights that tariffs could particularly impact the prices of agricultural products, electronics, appliances, apparel, and more, potentially leading to higher reliance on credit cards or debt.

Credit card interest rates are currently at historic highs, putting pressure on consumers’ budgets. Despite previous rate cuts by the Federal Reserve, interest rates remain high, impacting not only credit card accounts but also lending industry as a whole.

While high interest rates may increase debt burdens, they also present an opportunity for higher returns on savings, allowing consumers to build emergency funds and reduce the need for additional debt.

The uncertain future of the CFPB, which plays a crucial role in protecting consumers from unfair practices, could have implications on debt relief options and consumer protection measures.

Legislative changes and funding restrictions could impact the CFPB’s ability to regulate lending and debt collection practices, potentially affecting consumers’ financial security.

As the tax filing deadline approaches, consumers are advised to consider how their tax returns could impact their debt situation. Whether using refunds to pay off debt or exploring relief options for tax bills, careful financial planning is essential.

With rising costs and debt payments, reevaluating your budget and finding areas to cut back can help alleviate financial strain. Building an emergency fund and seeking government assistance if necessary are also recommended strategies.

Negotiating with creditors to lower interest rates or defer payments can provide temporary relief for those struggling with debt. Taking proactive steps to address debt issues is crucial for financial stability.

For those facing overwhelming debt, seeking assistance from a credit counseling agency can provide valuable insights and options for debt relief, such as consolidation loans or bankruptcy.