Credit Card Debt
It may be somewhat of a surprise to know that America’s average credit card debt has mounted to over $1 trillion by 2018. Distributed among 126 million households, this number represents roughly 27% of the total American consumer debt. In response to this overwhelming reality, there are many credit card debt relief programs available to consumers whose goal is to be debt free.
Another interesting stat provided by the National Debt Relief Organization states that individuals with credit card debt have an average balance of over $3,000. This number increases drastically for American households with credit card debt to more than $8,000. What is more, the average American household debt, including credit card debt, is almost at a whopping $16,000.
Interest rates further compound the debt scenario. On average, people with household debts of the above-mentioned size, are paying nearly $1000 in interest every year. In other words, a significant amount of household debt payments are not significantly lowering the principal on the statement balance, but are paying for interest and fees annually.
There’s a good side to owing money
Sometimes, borrowing money can be a good thing. One of the advantages of having credit card debt is getting to build up your credit score. However, this happens when you are diligent in making payments on time. Building up your credit score will, in turn, allow you to be approved for higher credit limits at lower interest rates. You might need it in the future, especially for buying a home or a car, or any big item. When you have several outstanding credit card balances and still have a high credit score because you have been paying on time, credit card debt consolidation may be feasible at a lower interest rate.
However, credit card debt can be very damaging as well. If you borrow more than what you can afford to pay back and your monthly payments don’t bring your balance to zero or 30% and lower than your credit limit on the credit card monthly bill, you might be heading for credit card debt relief. Being a sensible credit card user is, therefore, the way to a better future. After all, no one wants to carry a wad of cash on hand. Convenience in payment is not the only reason to use a credit card. Purchasing big items, such as TVs and furniture, is possible by using a credit card in cases when there may not be enough cash in the bank account, or you are caught between paychecks.