A credit card represents one way to purchase an item without paying for it upon receipt. Unfortunately, if credit card bills are not immediately repaid, it becomes an expensive way to borrow. Credit card interest rates tend to be quite high, with the current national average APR standing at 14.97 percent. This is slightly higher than the average APR reported six months ago, which was 14.95 percent. As of November 2011, the average APR for a credit card containing a balance was 12.78 percent. Bankruptcy attorneys erase credit card debt every day and is an effective way to get out of a debt jam.
The Federal Reserve reported $801 billion in revolving U.S. debt as of December 2011. An amazing 98 percent of this massive figure is made up of credit card debt. In January 2012, Moody’s reported a 2.93 percent 30-day delinquency rate for U.S. credit cards. The average amount of credit card debt for a household having this type of debt is approximately $15,956.
Though credit cards help build credit, make it easier to buy expensive items, and offer purchase protection, consumers often use them as high-interest loans. As they accumulatecredit card debt, many people have difficulty getting rid of it. Card providers do not make this any easier, requiring minimum monthly payments of only two to three percent of the account balance. High interest rates cause balances to grow substantially over a short timeframe.
Consumers should learn how to use their credit cards responsibly so they do not wind up in debt. They should not charge what they cannot afford because this is overspending. Living beyond one’s means can become very expensive when the individual does not pay off the balance when the credit card statement arrives. Cardholders should also avoid using credit cards for cash advances because these transactions have a higher interest rate, additional fees, and no grace period for repayment.
Using a credit card to pay for disposable items like food and gasoline is not recommended. Cardholders should not find themselves paying interest for items they have already consumed. They should also not purchase the special services offered by some credit card providers. Life insurance and fraud protection are usually overpriced and unnecessary.
Cardholders can avoid credit card debt by creating budgets, using their cards only for emergencies, and repaying account balances on time and in full. They should limit the number of active cards and keep records of their purchases. Preventing credit card default helps consumers stay out of the realm of bankruptcy. But when you get in trouble with credit card debt, only a qualified bankruptcy lawyer can get you out of this type of mess.