rewrite this title Factors That Could Affect Your Debt — and What You Can Do – NerdWallet

Reducing debt is Americans’ top financial priority for 2025. That’s according to the CFP Board of Standard’s Debt and New Year’s Resolutions Report.

It’s an understandable goal: Household debt is at an all-time high, delinquencies are rising and policy changes under a new presidential administration are adding to financial uncertainty for many consumers.

“The question then is, what conditions are going to exist in the economy that make it either easy or difficult for them to turn things around?” says Bruce McClary, senior vice president of membership and communications at the ​​​​​​​National Foundation for Credit Counseling.

We asked experts to share what could have the biggest impact on people’s debt loads in the coming months, and strategies you can use to pay off debt.

President Donald Trump imposed new tariffs on Mexico, Canada and China earlier this year. Since then, some countries have announced retaliatory tariffs on U.S. goods, and certain tariffs have been paused. While the updates may be dizzying, prepare for rising prices across various goods and services.

Because these tariffs target the U.S.’ three biggest trading partners, “it’s almost as if nothing is safe at this point,” says Kimberly Watkins, an assistant professor of financial planning, housing and consumer economics at the University of Georgia. “Particularly, some of the things that impact us on the daily are things related to agriculture; so produce, fresh fruit and veggies.”

Higher prices are “going to disproportionately affect low and moderate-income households that might have already been struggling to get access to produce to begin with,” Watkins says. This could increase reliance on credit cards or other debt to cover the costs.

Watkins also expects price increases in categories such as electronics, appliances, apparel, toys, cars and car parts.

While tariffs might drive up costs, the Trump administration says they are necessary to create a fairer trading system.

“Access to cheap goods is not the essence of the American Dream. The American Dream is rooted in the concept that any citizen can achieve prosperity, upward mobility, and economic security,” Treasury Secretary Scott Bessent said in a March 6 speech at the Economic Club of New York.

“International economic relations that do not work for the American people must be re-examined,” he added.

Credit card interest rates are near historic highs, McClary notes, at an average of nearly 23% on accounts assessed interest. This puts pressure on people’s budgets, he says, and can keep them in a cycle of debt longer, especially if they’re making minimum payments only.

The federal funds rate, set by the Federal Reserve to help control inflation, influences the interest rates that banks charge.

Previous Fed rate cuts haven’t lowered credit card interest rates as quickly or as significantly as anticipated, McClary says, and not just with cards, but across the lending industry.

But there’s a silver lining to a high-rate environment: you can earn a bigger return on savings. You could grow an emergency fund faster, reducing your need to take on additional debt.

Keep an eye on Fed rate changes and watch for legislative developments, too; Recently, a bipartisan House bill was introduced that aims to cap credit card interest rates at 10%.

The CFPB plays a key role in protecting consumers from unfair lending and debt collection practices. The agency has returned over $21 billion to consumers in compensation, principal reductions, canceled debt and other relief. Now, its future is uncertain.

A Senate bill was recently introduced that would prevent the CFPB director from requesting funding, with legislators citing concerns that the agency has overstepped its regulatory powers.

“If they don’t have funding, they can’t carry out their job, and then that means consumers are not being protected,” says Mike Litt, consumer campaign director for the U.S. Public Interest Research Group.

Resolutions could also overturn recent CFPB rules, Litt says, including a rule to limit overdraft fees charged by big banks and credit unions.

Overdraft fees “mostly penalize people who have the least money to lose,” Litt says. “Some banks have changed their overdraft practices under the CFPB’s closer watch, but many are still charging fees as high as $35, sometimes multiple times a day.”

The tax filing deadline, April 15, is approaching. If you owe money when you file this year, it could put you in debt, or make it harder to pay existing debt. If you’re struggling with your tax bill, explore relief options, such as IRS payment plans.

If you’re expecting a refund, using it to pay off debt, especially high-interest credit cards, could be a good choice, McClary says.

Balancing debt payments and rising costs can get expensive.

“Look for room in your budget to add that cushion to insulate yourself from some of the price increases that might happen in the marketplace,” McClary says. “Think about your spending patterns and where you can limit in some areas to be able to keep the necessities on track.”

As you refine your budget, try to shore up your emergency fund, too. If you’re still struggling to afford necessities, consider turning to government assistance, Watkins says.

Watkins suggests contacting creditors to try negotiating interest rates down, or ask to forgo payments for a while.

Litt recently asked his credit card company about lowering his rate. He was offered a choice between a permanent APR reduction of a few percentage points or a limited-time 0% offer.

“It doesn’t cost anything to just call up and see if you can deflate your rate,” he says.

If aggressive budgeting and customer service calls don’t free up enough money to keep up with payments, explore other debt relief options, such as consolidation loans, balance transfer cards or bankruptcy.

A nonprofit credit counseling agency will review your financial situation and provide options. In most cases, the initial session is free, McClary says.