New Study Addresses Credit Card Debt and Rising Interest Rates

If you are carrying a significant balance on your credit cards, you may not be alone with your debt struggles. But just because more Americans are carrying more credit card debt does not mean that living with revolving balances is a long-term solution to your financial problems. According to a recent article in Nerd Wallet, with rising interest rates, more people who carry substantial revolving balances may find their credit card bills even more difficult to manage. Since last year, revolving credit card balances across the country have risen by about 5% to $420.22 billion.
For some of those debtors, filing for personal bankruptcy may be the best solution if paying off the credit card debt does not seem feasible.
Average Credit Card Debt and Difficulty with Repayment
According to the article, the average household in the U.S. carries a revolving credit balance of almost $7,000. Revolving balances refer to those balances that you do not pay off, but that you carry from one month to the next (and that are accruing interest). The article refers to revolving balances as a “pernicious type of debt” given that it “often comes with high interest rates that make it a challenge to pay off.” Indeed, this debt feels unmanageable for many Americans, and nearly 10% of Americans with revolving credit card balances “say they don’t think they will ever be completely free of credit card debt.”
Why do so many Americans struggle with credit card debt? There are a few reasons. First, many Americans with revolving balances have credit cards with high interest rates. As such, making the minimum monthly payment on credit cards often does not make any kind of a dent in the principal owed. Further, there are more people than you might think who live beyond their means with credit cards, making it impossible to avoid charging more each month while attempting to make minimum monthly payments to remain in good standing with the credit card company.
More Than Credit Card Debt Plagues American Households
In addition to the reasons that many American households take on—and can not pay off—credit card debt, it is important to recognize that credit card debt is only a portion of the debt that most Americans owe. The article reports that, in households with any revolving credit card balances, the average total debt is almost $136,000. That debt comes largely from mortgages, student loan balances, and medical debt. At the same time, the cost of living continues to rise, and many people do not see related increases in salary to keep up. The total debt currently owed in the U.S. is at more than $13.5 trillion.
Nearly 50% of Americans have some credit card debt. Currently, 42 million Americans also have student loan debt, and for those whose loans are in forbearance, the average balance is nearly $44,000. There may be ways for consumers with a reasonable income to pay off credit card debt, such as with a balance transfer that has a 0% APR period. However, bankruptcy also may be an option to help lessen the stress of substantial debt.
Contact an Oak Park Bankruptcy Lawyer
If you have questions about managing debt or filing for consumer bankruptcy, you should speak with an Oak Park bankruptcy lawyer about your situation. Contact the Emerson Law Firm to learn more.
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