Most Tennessee consumers are likely carrying more credit card debt than they were before the holiday season. In fact, across the United States, credit card debt is currently the highest that it has ever been, and some experts are worried. Although many people seem to be managing their debt well enough, soon-to-rise interest rates and lower income consumers may struggle to repay what they owe.
Nationwide revolving debt — which includes credit cards — reached an all-time high just before the 2008 Great Recession. Credit card debt declined during the recession, and recently hit a new high at $1.023 trillion in Nov. 2017. Consumers added $11.2 billion to their credit cards between Oct. and Nov. 2017 alone. During that same period, debt for nonrevolving credit — such as car and student loans — also increased, and topped out at $2.804 trillion.
Some people see the rise in revolving debt as an indication that the economy is picking up. Delinquencies on credit cards issued by banks are also much lower than the historic average at 2.62 percent, meaning that consumers might be better managing their debt. While this might all seem like good news, interest rates are likely to go up in the near future. Even a moderate interest rate increase could make it difficult for consumers to pay back what their debts, and it could be particularly hard for low-income individuals.
Consumers typically take on debt with the full intention of paying it back. However, credit card debt in particular can be especially difficult to overcome once it has gotten out of control, and soaring interest rates that add more and more to the bill each month only complicate the matter. When Tennessee debtors need a fresh financial start, bankruptcy can be an appropriate course of action to pursue. By forming a manageable repayment plan with Chapter 13 or completely discharging debts with Chapter 7, bankruptcy is an effective tool for handling debt.
Source: New York Daily News, “The U.S. has more credit card debt than ever before“, Terence Cullen, Jan. 9, 2018