Interest rates increased recently and may continue to rise, which means that it may be harder for people in the Louisville area to get their credit card balances paid down once they rack them up. This is because money that formerly would have gone to reduce the principal balance will now get eaten up in added interest costs.
The rising interest rates are also coming at a time when the United States is swimming in credit card debt. The overall amount of credit card balances exceeds $1 trillion, which is the most credit card debt Americans have ever amassed.
While people can always put off paying credit cards by making minimum payments only when times are good, the bills from credit cards can quickly get overwhelming when the economy sours and a person loses his or her job or faces sudden expenses.
There are ways that people can cope with credit card debt without resorting to bankruptcy. For example, people can, when times are good, gradually pay down the debt while building up an emergency reserve fund to protect against sudden expenditures. Sometimes, it may be a smart move to consolidate credit card debts at a lower interest rate by taking a home equity loan or a loan against one’s retirement plan.
However, especially if credit cards are starting to make one’s financial life unmanageable, a Louisville, Kentucky, family should definitely consider personal bankruptcy as a viable option. A bankruptcy can give a family the fresh start needed to build up their savings.
Source: CBS New York, “Rising interest rates could make it tougher to pay off credit card debt,” Feb. 8, 2018.