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American credit card debt breaks $1 trillion

On Behalf of | Nov 8, 2023 | Credit Card Debt

Credit card debt in the United States has recently hit an all-time high. Reports indicate that it cumulatively broke $1 trillion earlier this fall. It’s a dramatic spike showing that Americans are more reliant on credit cards than they ever have been before.

Of course, there are those who simply put all of their charges on a credit card every month and then pay it off at the end of the month. They may cycle their money through the credit card in order to use the rewards system.

But it’s also worth noting that interest rates have jumped to higher levels than have been seen in the last 22 years. Part of the reason for the increase in credit card debt could be that interest rates are going up, and those who cannot afford to pay their cards off at the end of the month are seeing incredible levels of compounding interest. They owe more than they ever expected, and the interest keeps making that debt even worse every month. Minimum payments will never get them out.

What options are there?

People who find themselves in this position, often feel like they are caught in a downward spiral. They can’t afford to pay all of their bills, but they still have to make necessary purchases. A credit card acts as a Band-Aid, giving them a short-term solution but causing long-term problems.

Fortunately, there are ways to break the cycle. Bankruptcy is one potential option. It can be used to re-organize debt or even liquidate assets and pay off some of the debt. A person can then rebuild their credit score after bankruptcy so that they still qualify for lending options.

When debt gets complicated, people need to be sure that they understand all of the legal options at their disposal.

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The Law Office of Kim Covington, is a woman owned debt relief agency, and I have helped families, individuals and small businesses, file for bankruptcy relief under the U.S. Bankruptcy Code, for over 24 years.