Credit card debt is something that hits some people harder than others. People get credit cards for many different reasons. They may want to establish credit worthiness. They may also want to add a cushion to their income so that they are prepared for a financial emergency if one arises. Others may need to make a major purchase, and not have the cash on hand.
When a person manages credit card debt responsibly, it can actually be beneficial to carry some credit cards. Most cards only charge interest if a balance is carried over from month to month. Even if an interest rate is high it won't matter if the balance in completely paid before the due date.
Losing Control of Credit
Unfortunately not everyone is able to handle managing their finances effectively. Some may find themselves carrying more and more debt and even paying bills late. This leads to late fees with extra payments and higher interest as the credit card company begins to believe that the customer might have difficulties keeping up.
While a person from any generation can fall into a credit trap, those in their late 40s and early 50s are most effective by credit card debt. On average, people in this age group carry close to $9,000, while millennials have about a third less debt.
Consequences of Credit Card Debt
Besides having larger bills and higher interest rates, too much credit card debt can affect the type of employment a person is able to obtain. It can also lead to more missed and late payments, and consequently calls and letters from creditors, wage garnishments and more.
As more and more money is owed at higher interest, many find it nearly impossible to get back on the right track on their own. Even those that can manage minimum payments can be paying on their accounts for years or decades while barely nicking the balance.
A Look at Solutions
When any problem becomes serious enough, it's time to ask for help in finding a solution. For those with a high level of credit card debt, a bankruptcy attorney is often a good person to turn to. For some filing bankruptcy and having their debts released or reduced and reorganized is the right decision.
Filing stops creditor harassment almost immediately. An attorney can also help with other debt settlement on consolidation plans that allow for lower interest rates and bills. They may also offer credit counseling services and options for refinancing and other loan modification options. If none of these options is right, an actual bankruptcy may be pursued.
Although filing does affect credit worthiness and a person's credit score for a while many people are able to eventually obtain new credit and move forward financially.