With rising cost of medical care and the unexpected debts that accumulate for both the insured and uninsured, it is no surprise that medical bills are a leading contributor to credit card debts. Average consumers turn to their credit card if they go through an unexpected financial loss caused by divorce, job loss, or injury. Now a survey shows that medical expenses are a leading cause of credit card debts in Tennessee and nationwide.
A national online survey randomly selected participants who carried a credit card balance for at least three months. There is evidence that new laws aimed at protecting consumer rights and reducing debt has helped Americans. The average credit card debt has declined from $9,887 to $7,145. Many are avoiding fees and working to pay balances down faster. However 40% of consumers are still using their credit cards to pay for basic expenses, including mortgage, rent, groceries, utilities, and insurance.
According to economic experts, there is still a wide gap between an average income and the cost of living. The problem is that people still rely on their plastic safety-net to make ends meet. This was particularly true when it came to medical expenses. More than three-fourths of the households had out-of-pocket medical expenses and 62 percent of those said that medical costs contributed to medical debts.
Any credit card debt is difficult to pay off, especially considering the accumulation of interest and fees. For those with massing debt, financial independence and recovery can seem impossible. If you have significant credit card debt or medical bills, Chapter 7 or Chapter 13 may be the right solution for you.
Source: New York Times, “Medical Costs Contribute to Credit Card Debt,” Ann Carrns, May 22, 2012