3 important debt relief questions to ask this May

April was a rocky month for the economy, with stock market volatility hurting the savings of millions of Americans. If you're one of those who saw their investments and savings decline in the month, and are already trying to cope with accumulated high-rate debt, you may be considering your next steps.

Recent reports reveal that borrowers are dealing with more credit card debt than ever — $1.2 trillion — and overall household debt at $18.04 trillion. Additionally, credit card interest rates are near all-time highs right now at around 22%. With such staggering levels of debt, many find themselves searching for ways to reduce their debt.

This May is an important month for those who are carrying debt, as the Federal Reserve is set to meet to determine next steps in rate and monetary policy and a new inflation reading will be released. The impact of those two events tend to trickle down to you and your debt, whether directly or indirectly, which is why it's important to track what happens. As you prepare for any changes in store next month for the economy and interest rates, it helps to start thinking through some important debt relief questions (and answers) now. Below, we'll break down three to consider this May.

See what debt relief options make sense for you now here.

3 important debt relief questions to ask this May

Here are three questions borrowers should consider to better determine if debt relief is worth pursuing this May:

Will inflation fall low enough to improve my financial situation? 

On May 13 the Bureau of Labor Statistics will release its monthly inflation report. The report will reveal the inflation rate for April, which many are hoping will show a third consecutive monthly decline. In a general sense, decreased inflation is good for your finances and debt. It means that the cost of things you pay for every day is lower, which can make your dollars stretch further. However, the increased affordability likely won't be enough to make a big impact on your financial situation. 

That's because a drop in inflation likely won't have a significant effect on your debt's interest rates. So, while inflation may slow down, your interest rates will likely stay the same. They'll continue to add to your balances through compounding interest, leaving you with minimum payments that make little difference in the short term. 

If you don't foresee your finances improving, it may be time to consider a debt relief option like credit card debt forgiveness. If you qualify, a debt forgiveness program can reduce what you owe by 30% to 50%.

Find a debt relief plan today that can help you pay down your debt here. 

Will the Fed cut rates and will it impact my debt?

The general opinion right now is that the Fed won't cut rates at their meeting when it ends on May 7. Fed Chair Jerome Powell has maintained that the Fed is taking a wait-and-see approach to rate action. Additionally, the CME Group's FedWatch tool, has a rate cut for May listed at just a 6.8% likelihood.

What's that mean for your debt situation? There's a good chance that the interest rates for your loan and credit card debt likely won't go down. Loan rates tend to be more sensitive to Fed rate cuts, pauses, and increases, which is why they're likely to remain relatively static if the Fed continues its rate pause. Credit card rates aren't directly linked to the Fed rate, so a continued pause at this May's meeting could result in the same rate or an increase, depending on how your credit card issuer interprets the factors it uses to determine your rates.

In any case, it's likely your debt won't get any cheaper in May, which is why it might make sense for you to explore debt relief options now. For example, a debt management program can be a good way to gain control of multiple credit card balances and get lower interest rates on what you owe (if you qualify). 

Can you afford for your debt to get more expensive? 

Amid multiple economic concerns that are unlikely to wane in May, now's the time to ask a tough question you may not want to answer, says Lynnette Khalfani-Cox, a personal finance coach and founder of TheMoneyCoach.net.

"Consumers should be asking: 'Can I afford for my debt to get even more expensive?'," Khalfani-Cox says. "If you're carrying credit card debt right now, you're already paying sky-high interest — likely about 20% or more. If the Fed signals more hikes, your rates could jump again."

Waiting until rate cuts or rate increases happen is the wrong move, Khalfani-Cox says. Take action now. 

"This is the time to get proactive: look into balance transfer cards, consolidate with a personal loan, or call your lender and negotiate a lower rate," she says. "In short: don't wait for the storm to hit. Grab your financial umbrella now."

As you build a plan for lowering your debt, make sure you stay calm no matter how bad it gets. 

"Don't panic," Khalfani-Cox says. "Just make a plan. Think of your debt like a leaky boat. The stock market and the overall economy may be choppy, but if you plug the holes — meaning high-interest balances — you can stay afloat." 

The bottom line

If you're carrying debt right now, it's important to ask yourself some tough questions before this May arrives with its new inflation report and a Fed meeting. There's a good chance any changes to the inflation rate won't have a significant impact on your debt, and the Fed is unlikely to make rate changes, either, which will translate to your interest rates remaining where they're at. The important thing is that you take action — list your debts and interest rates, consider whether you could afford any future interest rate increases on your debt and find a solution for lowering your interest rates, what you owe to lenders or both.