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Credit card debt in the United States continues to rise

Consumers in Florida and around the country now prefer credit cards over cash or debit cards to pay for their purchases, and this has led to revolving debt balances in the United States reaching levels last seen in the months leading up to the 2008 financial crisis. Americans now owe more than $1 trillion in revolving debt, which is largely credit cards, according to the U.S. Federal Reserve, and most experts believe that this figure will continue to rise.

While lending practices have become more constrained in recent years, individuals with poor credit are still able to obtain credit cards. However, they are usually given modest credit limits and are rarely able to carry large unpaid balances. This not only makes delinquencies more likely, but it can also reduce credit scores. Debt ratio is an important component of credit score algorithms, and consumers who have little revolving credit available will generally have lower scores even if they make their payments on time.

Credit cards are also becoming more popular due to the rewards and loyalty programs offered by lenders. Consumers are encouraged to use their cards to earn points or miles, but banks are more than able to make these costs up by charging fees and high interest rates. Psychologists say that the lure of perks can prompt people to act rashly, and studies found that many consumers spend irresponsibly when they are nearing a rewards plateau.

Credit cards provide a simple and convenient way to borrow, but revolving debt can be a trap that is difficult to escape. Many families rely on credit cards to make ends meet because they feel that they have few other options, but lawyers could explain how pursuing Chapter 13 bankruptcy relief can put an end to creditor harassment and offer the possibility of a new start.

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