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Credit card debt is a complex problem

According to the Federal Reserve, American consumers collectively owe nearly $1 trillion in credit card debt. Another survey found that individuals carry an average of $7,000 on credit cards. The reasons behind these high credit card debt loads are complicated, and no two Tennessee residents share the exact same set of circumstances.

In some cases, consumers are lured in by the appeal of credit card reward programs. Many cards offer frequent flyer miles, hotel points or cash back based on every dollar charged. These can be great programs, but only if consumers are mindful of how they handle that debt. Far too often, the only party being rewarded is the credit card issuer.

Another common problem involves the need to keep up appearances. This can come into play whether a consumer is 22 or 52 years of age. Many people feel compelled to spend money at the same level as their peers, even when they have no true understanding of the financial life of another individual.

Yet another problem involves insufficient emergency savings. According to one survey, more than half of all Americans have access to less than $1,000 in savings. That's not much of a cushion to cover a blown car engine or an unplanned job loss.

For those in Tennessee who are struggling under a mountain of credit card debt, understanding the factors that led to that set of circumstances is important. Personal bankruptcy can eliminate a large volume of unsecured debt. However, unless consumers change the way they approach money, credit card debt is likely to return. An important component of personal bankruptcy involves financial education to ensure a better outcome in the years ahead.

Source:, "Why are Americans drowning in credit card debt?", Valencia Higuera, Dec. 7, 2017

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