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Credit card debt and 90-day delinquencies reach record levels

The popular perception in recent years has generally been that the credit card debt load of consumers was under control. The bankruptcy numbers were down, the recession ended, and the prior dramatic reports of a credit card crisis were at a standstill. Recent data from the Federal Reserve, however, reveals that U.S. credit card debt hit an all-time record high of $870 billion as of Dec. 2018, a trend reflected in Tennessee as well as most other states.

The news contains an even more ominous note and that is that delinquencies are also up. About 37 million credit card accounts reportedly carried a delinquency of more than 90 days in the fourth quarter of 2018. That was an increase of about two million from the fourth quarter of the preceding year. In addition, it may be a sign of economic troubles ahead that a few of the largest food chain retailers are banning payments by credit card due to disputes over the fees charged.

Some consumers may benefit from switching from higher interest cards or getting cards that offer benefits and rewards. Cash back rewards that are credited to one's account are a particularly helpful benefit. Such perks, however, will do little or nothing to dent the overwhelming balances carried by some individuals and families.

The steady increase of credit card debt, along with the upward swing in delinquencies, appears to portend rougher days ahead for some consumers here in Tennessee and nationwide. Whenever there is a decrease in income for a family, credit card debt generally increases as consumers use the cards in an attempt to extend their chances for economic survival. Statistics show that few Americans have a savings cushion to support their budgets for any extended time in the event of unemployment. When the consumer runs into an overwhelming debt load that cannot be cured by moderate debt relief measures, Chapter 7 bankruptcy for qualified persons remains the most effective way to erase unsecured credit card debt and obtain a fresh start.  

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