Credit card debt is a burden for many consumers. Most have a complicated relationship with their credit cards. On one hand, disciplined and modest use of a credit card to make certain purchases can help establish a good credit score. On the other hand, if the balance on a credit card is not paid in full each month, and on time, the balance can quickly spiral out of control.
According a recent study by CompareCards, American consumers are carrying an all-time high of $1.1 trillion in credit card and other types of revolving debt. This figure is up nearly 20 percent from where it was just ten years ago.
With the average balance at $6,200, it is estimated that the average American consumer has four credit cards, according to the credit bureau, Experian. The more the consumer spends on the card and pays his or her monthly minimum payment, the more credit is offered to him or her in terms of spending limits. The typical credit spending limit has gone up by 20 percent over the last few years to a staggering $31,000.
Financial experts have expressed concern regarding what consumers are using their credit cards for, including emergency expenses and simple, daily spending. With the cost of health care and education going up every year, members of the middle-class are struggling to make ends meet and are often resorting to credit to cover what their income does not.
Using credit cards to pay for everyday necessities is one of the main reasons why so many American consumers are carrying such high credit card balances. According to the debt reduction company, Freedom Debt Relief, daily expenses, such as groceries, are the number one reason why consumers carry a credit card balance.
More consumers are charging groceries because they are struggling with other, larger forms of debt. Student loan debt, mortgage balances and car loans are weighing consumers down, leaving them with very little discretionary income to use to pay for the most basic of purchases.
Credit card spending and borrowing often can be an indication of economic recovery, which could explain why these numbers have gone up over the past ten years.
As bankruptcy attorneys, we see credit card debt as one of the most common problems facing those with serious financial challenges. It is not surprising with the high interest rates, unreasonable fees, harassing debt collection calls, penalties and never-ending minimum payments that do not even make a dent in your actual debt. We offer additional tips for eliminating credit card debt on our blog.
Filing for bankruptcy is also a viable option for those struggling with insurmountable credit card debt. Chapter 7 is the fastest form of consumer bankruptcy and forgives most unsecured debts like credit card debt, medical bills and personal loans. There are certain qualifications a consumer must meet in regards to income, assets and expenses to file for Chapter 7 bankruptcy, which is determined by the bankruptcy means test.
If you have questions on this topic or are in financial crisis and considering filing for bankruptcy, contact an experienced Miami bankruptcy attorney who can advise you of all of your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade Garcia McMaken has been helping people from all walks of life build a better tomorrow. Our attorneys’ help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade Garcia McMaken website at www.miamibankruptcy.com.
Source- USA Today