The number of Americans carrying credit card debt has skyrocketed
. The number of individuals who own cards has gone up, and the overall debt load has reached over $1.4 trillion dollars
, according to Yahoo Finance. Other debts
, such as auto loans and student loans, are up as well.
In addition, the number of cards being issued to subprime borrowers, those with credit scores below 600, has also gone up. This is of course the same mistake the banking industry made when it sparked the Great Recession 2008.
Making the Minimum Payment
As mentioned in a previous article, making the minimum payments, and only the minimum payments, is likely to keep you in debt for decades.
If you only make the minimum payment you rack up an incredible balance in interest alone. NerdWallet
reports paying the minimums on $6,000 of debt can result in paying over $4,000 in interest over time. And, of course, the balance on your principle barely moves at all.
Paying the bare minimum month after month is a sign you are in financial trouble, and one you should take seriously. Usually the next step is falling behind. After that, you end up with a credit card in collections. Things go downhill from there.
Using the Card to Pay for Basic Expenses
Studies show Americans aren’t paying for the stereotypical shopping sprees portrayed by the “Americans are just irresponsible and credit card companies are the good guys” narrative the banking industry likes to repeat.
So why is such a responsible use of credit a mistake?
Simply this: using credit to pay for basic expenses is another sign your household is in over its head.
Failing to Watch Your Interest Rates
If you’re shopping around for a new card, particularly after bankruptcy, you need to watch the interest rates very closely. Cards are happy to issue credit but some of the offers you get will be downright predatory.
If you haven’t filed bankruptcy yet, look at your interest rate. If it suddenly shoots up, it’s another sign you need to take a serious look at it. Credit cards know their business. They often know you’re in financial trouble even before you do. They respond by trying to make as much profit off you as possible before you stop paying.
Waiting Too Long to File Bankruptcy
Once you start seeing signs of financial trouble you need to start giving bankruptcy some serious thought. The longer you wait the more good money you’ll end up throwing after bad. You don’t want to be in a position where you’re already worried about foreclosure or repossessions. You definitely don’t want to push yourself into a position that makes emergency bankruptcy your only option.
Instead, contact our offices to take advantage of one of our free consultations. We’ll be happy to show you how we can protect your financial future .