The average American family carries $5,000 or more in credit card debt. While this may not sound like an alarming number, credit card debt is one of those things that quickly slide out of control if you aren’t careful. For many people, their credit card is a financial tool for improving their profile; for others it can be an unfortunate essential tool for making ends meet. Here are some of the top reasons people end up in too much credit debt:
With today’s health insurance crisis too many people are falling through the cracks of no coverage, coverage gaps or denied coverage. Medical bills are a huge strain on most families that are suffering in one of these unfortunate conditions. Too many people make the mistake of paying medical bills with a credit card, and end up paying interest charges on a balance that could have been interest free had they negotiated a payment plan with the doctor or hospital directly.
The job market is doing better in recent months, but we are still far from lucrative when it comes to employment in many industries. Older generations are being laid off to allow room for fresh, and notably cheaper, employees. Companies are making cuts across the board to save money and improve profit margins, leaving many unemployed. With the unemployment lines backed up too many people are finding themselves using credit cards to fund essential living expenses like rent, gas and groceries.
As if college graduates didn’t have enough to worry about with student loan debts, many are also graduating with significant amounts of credit card debt. Whether they used credit cards to supplement what loans didn’t pay for, or they simply indulged too much too quickly with frivolous spending many are thousands of dollars in debt after leaving the commencement stage.
We are all guilty of whipping out the credit card to pay for something we want and not necessarily need, but when is it too far? A credit card shouldn’t be used as a convenient spending tool, it should be used with purpose. Planning purchases and paying them off in a few months is the best way to build a credit profile. Having balances over 40% of the limit and a never-reaching zero balance is bad for your credit profile. If you can’t control your spending with a credit card, don’t keep it in your wallet.
If you are dealing with too much credit debt contact a Fort Worth bankruptcy lawyer to discuss your options for getting out of debt and back on the right track.