Most people in Tennessee and elsewhere probably cannot even imagine $14 trillion, the total amount of debt Americans owe. However, for some who have lost their jobs or suffered other setbacks in recent months, their credit card debt may as well be trillions of dollars. Unfortunately, the events of the past year and the uncertainty of the economy have left many across the country struggling to make ends meet, and more families and individuals have gone deep into credit card debt to get through the tough times.
The good news is that incomes seem to be on the rise across the country. The not-so-good news is that more than half of Americans suffered a financial setback, such as a job loss or loss of one family member’s income, that sent their finances spiraling. For many, that meant wiping out their savings just to survive and turning to credit cards to buy what they needed. In fact, 45% of those responding to a recent survey reported taking on more debt last year to make ends meet.
No mercy from credit cards
While some credit card providers offered hardship relief, such as temporarily lowering interest rates or waiving payments, interest rates on credit cards are still exceedingly high. The typical credit card’s annual percentage rate is over 16%. Based on the average balance on most credit cards, that equals an annual interest payment of over $1,100.
Financial advisers recommend credit card holders do what they can to reduce their debt to avoid these crippling interest payments. One suggestion is to transfer one’s credit card balance to a card with a lower rate, but this may be impossible for someone whose credit rating is low. Instead, many are exploring the idea of filing for bankruptcy to seek relief from their overwhelming credit card debt.