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Credit card debt has changed in the United States

On Behalf of | Sep 2, 2022 | Bankruptcy

It’s interesting to think about how credit cards are being used and how they’re influencing the way people live in the United States. Are people still using credit cards the same way they always have? Are they relying on them to get from one paycheck to another? What is the real scenario most Americans are facing?

At the end of the fourth quarter of 2021, it was determined that the national average credit card balance had dropped by 10.7% around the U.S. compared to the same time in 2017. Part of the reason for this was that the government previously lowered interest rates in 2020 to stimulate the economy. As a result, people were able to pay down their balances more effectively.

Certain states saw more significant fluctuations in credit card debt than others. Alaska saw the biggest drop (-15.7%). At the end of the quarter, the average American had a balance of approximately $5,589.

Using credit cards correctly keeps them in line, but missing payments adds up

If you have credit cards, you need to understand the way they work. Credit cards are a kind of revolving credit, which means that you’ll pay interest on the debt you take on. Credit card providers calculate interest based on your daily balance (not what you originally borrowed). As a result, you may pay much, much more in interest than you would with other options, like certain kinds of personal or consolidation loans.

To protect yourself, it’s smart to pay off your credit card balance at the end of the billing period before interest accrues. You’ll still see the interest accrue daily from the first day you make a purchase, but if you pay off your credit card before the due date, then the interest won’t be added.

Struggling with credit card debt?

If you’re having a hard time with credit card debt, you’re not alone. Bankruptcy is one option that you may want to consider, but there are others as well. Take steps now to learn about your legal rights, so you can decide how to move forward toward a future without debt.

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