Credit cards can be a useful financial tool, if they are used wisely, but they can also be a quick way to financial ruin if they are used indiscriminately or in desperation. Unfortunately, many people do not have a healthy relationship with credit cards, and this can be seen in the latest findings on credit card debt.
According to a recent study, the amount of credit card debt in the second quarter of 2016 increased $34.4 billion, reaching an all time high since such statistics began to be recorded in 1986. It is estimated that total credit card debt will increase to $80 billion by the end of the year, topping out at over $1 trillion. That is certainly a staggering amount of credit card debt.
In terms of average balances per household, the number was $7,817 in the second quarter of the year, which is reportedly just over $600 below what is unsustainable for households. Add to that the fact that charge-off rates are very near all-time lows, meaning that the average household is carrying a significant amount of ever-increasing credit card debt with little or no relief from lending institutions. According to the researchers, the increase in credit card debt is not due financial weakening, but to consumer habits. Consumer credit card activity is reportedly similar to six months prior to the recession in 2007.
None of this, of course, is to judge those who make use of credit cards. In very many cases, credit cards are used as a means of paying monthly bills or other necessary expenses that cannot otherwise be paid. The problem is that high interest rates and significant late fees make credit cards a particularly risky way to pay for these expenses.
Those who, for whatever reason, find themselves neck-deep in credit card debt should know about their options for relief. While bankruptcy is never the first option to consider in dealing with burdensome debt, sometimes it is the most effective and sensible way out. Those who feel they may benefit from a bankruptcy filing should contact an experienced attorney to have their case evaluated and to receive advocacy in the bankruptcy process.