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Credit counselors have reported a significant increase in demand for financial counseling services so far this year and warned that the trend indicates increasing financial distress among U.S. consumers.
Money Management International (MMI), a credit counseling nonprofit, recently released data from an interim analysis that showed new clients in the first half of 2024 increased 52% compared to the same period last year, and the average unsecured debt for new clients was $28,000, up 9% from 2023.
Kate Bulger, MMI’s vice president of business development, told FOX Business that the organization has seen an increase in both the number of consumers needing assistance and the amount of debt they carry.
MMI warns that rising consumer debt is driving increased demand for credit counselling. (Robert Nickelsburg/Getty Images/Getty Images)
“People who were doing well a few years ago find themselves using credit cards to make up the difference between their income and expenses as inflation rises,” Bulger said. “As credit card balances rise, minimum payments begin to eat into household finances. The situation quickly becomes unsustainable.”
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According to MMI, the states with the largest increase in demand for credit counseling so far this year are:
1. Washington
An aerial view of Seattle, Washington. The evergreen state saw the highest increase in demand for credit counseling in the U.S. in the first half of 2024. (iStock/iStock)
Washington state topped the list with counseling growth up 60%. Unsecured debt among new MMI clients in the evergreen state also increased 13% in the first half of the year, to an average of $28,459.
2. Arizona
Arizona ranked second on the list with a 58% increase in credit counseling inquiries. Counseling clients in the Grand Canyon State also had higher unsecured debt than the same time last year, up 11% to $27,431.
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3. Minnesota
The Minneapolis skyline seen from the Stone Arch Bridge. Minnesota recorded the third-highest increase in demand for credit counseling among all 50 states in the first half of this year. (Education Images/Universal Images Group via Getty Images/Getty Images)
Minnesota ranked third with a 56 percent increase in demand for credit counseling, but it outpaced all other states in the surge in unsecured debt, an astounding 25 percent increase to an average of more than $30,212 per client.
4. New York
The demand for credit counseling new york A 55% increase in the first six months of 2024 puts New York state at No. 4 on the list. The average increase in unsecured debt held by financial counseling clients in the Empire State was 10%, less than half that of Minnesota, but New Yorkers are still saddled with a higher average of $30,414.
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5. Michigan
Michigan rounded out the top five with a 54% increase in credit counseling so far this year, while unsecured debt increased 12% to an average of $27,676.
