Many people in Louisville who racked up credit card debt due to holiday spending at the end of 2016 are now well underway into their New Year’s resolution of eliminating debt. But, as shown in one recent report, they are not alone in carrying outstanding credit card debt.
Outstanding credit card debt is on the rise, and has now reached pre-Great Recession levels. According to one report, the amount of outstanding credit card debt in the United States is over $1 trillion. In fact, over 150 million people in the United States had outstanding credit card debt on at least one card, if not more than one.
Part of this may be that, although household income has gone up over the past 10 years, the cost of living went up more. Therefore, more people in the United States have utilized credit cards to meet their expenses.
However, this can be an expensive solution. The average interest rate on a credit card is over 19 percent, meaning that on average, a household would owe over $1,330 in credit card interest annually.
It is important to keep in mind, however, a good amount of outstanding credit card debt — over 33 percent — will be paid off by the end of the month. If this is done, the debtors will not be subject to any finance charges. And, only approximately $650 billion of the $1 trillion in credit card debt had finance charges tacked on to it. In comparison, of the over $1 trillion in student loan debt owed by Americans, all of it incurred finance charges.
Of course, not everyone is able to cope with his or her outstanding credit card debt. While there are many reasons why a person is unable to pay their credit card bills, for some in Louisville, eliminating credit card debt can only be done by taking certain measures, such as filing for Chapter 7 bankruptcy.
Through a bankruptcy filing, debtors can address their outstanding liabilities in a proactive manner, rather than continuing to deal with harassing phone calls from creditors and threats of repossession or foreclosure. Nonetheless, it is important that a Chapter 7 bankruptcy filing be executed properly. To do so, a debtor may still want to seek legal advice before proceeding, so that they can obtain the fresh financial start they need.
Source: CNBC, “Credit card users rack up over $1 trillion in debt,” Jessica Dickler, Feb. 17, 2017