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Credit card debt can be costly

On Behalf of | Jul 26, 2019 | Bankruptcy

For many people in Connecticut, it is very difficult to pay off their credit card bills on a monthly basis. With high interest rates, people may find that their balances continue to rise. This can be especially true for people who have suffered a financial change since they first began to accumulate credit card debt.

According to economists, 82% of credit card balances are not paid off every month, and most of them turn into long-term debt. Of these, around 70% of credit card bills stick around for at least a year, and 55% linger on for at least two years.

This means that over half of all items charged to credit cards are long-term debt carried for at least one year. Many people are enticed to open a card due to an introductory 0% interest rate or another low-interest promotion.

However, when that rate rises to 28% or more, people may face even more difficulties paying off their bills. Economists advise people to prioritize paying off credit card debt more than other types of loans, such as student loans or home mortgages. However, even people with high credit scores may continue to carry significant balances if they keep up with their payments.

According to one study, people with outstanding credit card debt spend more on luxuries each month, including new clothes, eating out or online streaming services. However, this may not tell the whole story; many people with lower incomes overall may opt for small splurges but are unable to purchase larger, far more costly luxuries.

Many people find themselves unable to get out of credit card debt after a job loss, divorce or other situational change. A bankruptcy attorney might provide advice on seeking debt relief, including Chapter 7 or Chapter 13 bankruptcy to move toward a new financial future.