Whether it’s to buy a quick bite or for something more substantial credit cards provide convenience shopping to the consumer. Credit cards can be used in person or to indulge in online shopping.. But the ease and convenience of credit card can sometimes come with consequences.
Overuse of credit cards can often lead to accumulated debt. This debt may go unnoticed, or simply ignored for a long period of time, only for the person to realize too late that the debt has become unmanageable. According to sources, it is likely that this year Americans will accumulate more credit card debt than last year. Americans collectively paid almost $32.5 billion debt in the last quarter. A study conducted on the quarterly credit card debt showed that a majority of people are careless about their debt.
Americans pay off the most debt in the first quarter of the year, typically paying off purchases accumulated during the holidays. This also allows them to take advantage of early tax refunds. Households pay an average of $6,628 in that initial quarter. However, since the recession, debt payments have decreased. Compared to the first quarter of 2009, this year almost 28% less debt was paid. Predictions forecast that this year, credit card debt may increase by 8% from last year, and 14% from 2012.
Medical emergencies, job loss and pay cuts are some of the most common factors leading to debts. Many people build emergency funds, but sometimes these funds may not be enough to cover their expenses, and they subsequently use credit cards to pay off their bills.
However, if a person has overwhelming debt, he or she may file for bankruptcy under Chapter 7. In Chapter 7 bankruptcy filing, a person may keep certain property that is owned free and clear. This is known as liquidation bankruptcy. It may help an individual discharge a substantial debt related to credit cards, medical bills and other eligible debts. But only people who meet a certain criteria may be allowed to file for Chapter 7 bankruptcy.
Source: Time, “The Credit Card Bomb Just Waiting to Go Off,” Martha C White, June 11, 2014