As consumer debt hits a record figure in the U.S. families all around the country are struggling.
With inflation looming, gas prices on the rise, and grocery stores finding it difficult to stay supplied, what does this mean for the average American consumer?
What’s Causing the Debt?
For citizens, the growing debt in America can be a great source of concern, so it’s important to understand the causes. In the United States, housing is a big-ticket item.
That’s why it’s responsible for more than half of the total debt owed by citizens. Student loans come in second place, with nearly $1.6 trillion in loans currently outstanding.
But the third most common cause of debt is credit card debt. And while home loans grant you access to both a living space and an appreciating asset, and student loans help to increase your overall earning potential compared to your peers, credit card debt is only there to hold you down.
What’s So Bad About Credit Card Debt?
For the occasional purchase, using a credit card can be a fine expenditure that can even help you build up your credit score. Unfortunately, a lot of consumers in the United States can end up using a credit card for far more than the occasional purchase.
Families without an emergency fund can end up using it for a sudden large expense, like an issue with their work vehicle. And others may end up using their credit card for every purchase out of convenience.
This can end up causing you a lot of trouble down the line. If you find yourself unable to pay down your credit card debt, you’ll end up dealing with the high-interest rates credit card companies are allowed to charge you.
Think 18% and above. Missing just a few bills can end up exponentially increasing the amount you owe.
How Do You Avoid Credit Card Debt?
Obviously, the best way to avoid credit card debt is to not use one. But this can be a poor option for some, as a line of credit may afford them a level of financial leverage they otherwise wouldn’t have access to. It also limits a person’s ability to build up a credit score.
So for someone with a credit card, it’s important to only use it for small purchases. Start an emergency fund so you don’t feel tempted to reach for the card when things go awry. And always, always, pay your bill on time. Missing a bill can put you into a vicious cycle.
How Do I Get Out of Credit Card Debt?
If you already find yourself in debt, the situation isn’t hopeless. There are actually quite a few options available to you. For those in serious debt, one option may be bankruptcy. If you’re looking at this option, know that it’s not one to take lightly.
Bankruptcy can be an incredibly difficult process, and the result is incredibly damaging to your credit score. For those with a sizeable amount of credit card debt, but are looking for an easier way to pay it off, there are other options available.
One such option is to contact a debt relief agency, like www.FreedomDebtRelief.com, and engage in something known as “Debt Consolidation“.
What Is Debt Consolidation and How Can It Help Me?
For those with a large amount of credit card debt trying to get back on their feet, it can certainly seem like a hopeless situation. That’s where debt consolidation comes in. Debt consolidation is a process that allows consumers to take their high-interest debt, and roll it all into one loan with lower interest rates.
This can give consumers extra time to handle their finances and leads to paying a smaller amount over the lifetime of their loan. And when consumer debt hits a record figure in the U.S., having access to helpful tools like debt consolidation can be a blessing.
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