If you’ve been battling with credit card debt, you may be considering the ways in which you can eliminate it. While bankruptcy and credit counseling are possibilities, the real question is why so many people in America suffer from high debt-to-income ratios. Without the initial debt, many people would be better off and not have to struggle financially.
So, when does credit card debt become a problem? For many Americans, it’s early in life when credit first affects them. A news article on Feb. 9 reported that the majority of those in America have credit card debt, but the real surprise is that around 35 percent of those between 25 and 60 pay those debts off each and every month.
Most of the credit card debt seen in the USA is a result of those who don’t pay off their debts each month, leaving the debts to grow thanks to interest. As of December 2015, it’s estimated that consumers owe a shocking $936 billion in debts including auto loans, student loans, and credit cards.
What’s interesting is that studies show that while these people may always tend to keep a balance on their cards, the amount can quickly change if the credit limit is increased. If there is more money to spend, those individuals are more likely to spend it.
Most people between the ages of 18 and 34 have little in the way of savings; most have under $1,000, while others have nothing to fall back on. Combining that with high credit debt can be a recipe for disaster.
Source: Fortune, “Credit Card Debt Usually Begins Early for Americans,” Andrew Zaleski, Feb. 09, 2016