Residents of Kentucky may be interested in a recent article in Daily Finance, a financial website, which discussed average credit card debt calculations. The article pointed out the values associated with average credit card debt and the ways in which those values are used by reporting agencies. The article provided insight into why the reported averages seem to vary. Some common factors that go into calculating the average include whether or not the report includes store and gas cards and whether or not it includes those who typically pay their card off completely each month.
The numbers based on Federal Reserve statistics showed an average household credit card debt of $7,087. The average balance of an American adult with a credit card was $5,047, and the average balance of those who usually carryover a balance from month to month was $8,220. The article also discussed ways in which consumers can tackle these credit card balances, such as paying off high-interest and low balance cards first, using balance transfers and cutting up old cards but leaving the accounts open to remove temptation without impacting a credit score.
The fact remains that unsecured debt like credit card debt can quickly lead to bankruptcy if not managed properly. Most cards carry interest rates over 15 percent, and making only minimum payments on a relatively high balance can leave a credit card user paying more money in interest alone than the value of the balance before interest. Failure to pay the minimum can result in fees and creditor harassment.
Many users get into spiraling situation of using one credit card to pay off another, but this does nothing to resolve their debt. While the best practice is to control credit usage and have a repayment plan, bankruptcy is sometimes a viable tool for dealing with an insurmountable debt situation.
Source: Daily Finance, “Is Your Credit Card Debt Average? And What’s Average?”, Michele Lerner, June 11, 2014