Many Florida residents and others around the country utilize credit cards as part of their everyday finances. In some cases, consumers are able to pay off balances each month and do not incur high amounts of interest. However, others may find themselves with a substantial level of credit card debt. Experts frequently weigh in on how to reduce or eliminate this type of debt. While the predominant advice is to always use extra funds toward paying credit card balances, it may be more prudent to focus on another area first.
Statistics show that the average credit card balances for households in the country is approximately $16,000. Many consumers are only able to submit the minimum payment each month, which results in interest charges being assessed on the remaining balance. Therefore, when someone does find any surplus cash, he or she is inclined to apply it to credit card debt. Experts, however, recommend that every household have an emergency fund in place.
Many financial analysts believe that creating an emergency should be a priority. Something unforeseen could happen to anyone, such as a serious illness or loss of job, and create a heavy financial burden. Unfortunately, when those types of events happen, consumers are forced to use their credit cards for the emergency expenses. Then, balances and associated interest charges continue to accumulate.
Of course, if someone has an adequate cushion in savings, focusing on credit card debt should be the next priority. As important as saving for retirement is, it would be more beneficial to eliminate the need to pay the substantial interest rates on the cards. Likewise, it is more helpful to pay off credit cards before saving for other major purchases like a car or a house.
Credit card debt may seem insurmountable to some Florida residents. It would be helpful to seek the guidance of a bankruptcy attorney for assistance. An experienced lawyer can help clients develop a plan to help them get back on track financially.
Source: fool.com, “When Paying Off Credit Card Debt Is the First Thing You Should Do“, Maurie Backman, Nov. 2, 2017