The problem with accumulating too much credit card debt
In the first quarter of 2017, Americans reduced their credit card debt by a combined $30 billion. However, Florida residents and other Americans put $33 billion back on their credit cards in the second quarter. It is estimated that another $60 billion in new credit card debt will be accrued by the end of the year. If that happens, Americans will have in excess of $1 trillion in such debt.
Credit card balances generally don’t pose a problem if they are paid off in a timely manner. However, if they are not, increasing balances that must be paid off with interest may be harder to keep up with. Currently, the average interest rate on a credit card is about 16 percent, and it could go higher if the Federal Reserve raises the prime rate in the future.
While a person should aim to pay off a balance in full each month, this may not be possible after making a large purchase. In such a scenario, an individual should aim to have the debt paid off in three months at most. Those who can’t do that may be able to reduce their monthly payments by transferring their credit card debt to a new card with a lower rate.
If not paid promptly, credit card debt can reach unmanageable levels. This might lead to creditor phone calls or other collection actions. Filing for Chapter 13 bankruptcy may put an end to these calls and other actions. It could also allow an individual to have debt discharged without necessarily losing their property. An lawyer can explain which type of bankruptcy an individual may qualify for and the process for filing. Legal counsel may also explain the process of submitting a repayment plan to the court.