Americans’ Credit Card Debt Is Approaching 2008 Levels
Credit card debt is approaching 2008 levels with people in the south struggling especially hard.
As Americans struggle to keep up with the rising cost of living, credit card debt is once again reaching dangerously high levels for many families. As MarketWatch reports, the average household credit card debt is currently just over $16,000 and will likely exceed peak 2008 levels within the next couple of years. Furthermore, figures show that consumers in the Sun Belt states, including in Alabama, are suffering the worst from unsustainable credit card debt. However, the high debt levels have little to do with people spending irresponsibly and more to do with incomes failing to keep up with basic expenses.
Rising Credit Card Debt
Household credit card debt in the United States now stands at an average of $16,061, which is up from the average of $15,762 of 2015. Furthermore, it is ten percent higher than pre-recession levels from ten years ago, when the average household credit card debt stood at $14,546. Personal finance company NerdWallet predicts that credit card debt will reach 2008’s peak of $16,912 sometime in 2019.
However, the size of the debt is only one part of the story. In many states, particularly in the South, the real problem is the amount of time people are taking to pay off their debts. As CNBC reports, consumers in the Sun Belt states are especially struggling to pay off their credit card debts in a timely manner. Alabama, for example, only ranks 30th in the nation for largest average credit card debt, but because of relatively low income levels in the state, it ranks 13th for longest period of time (at 17 months) that residents take to pay off their credit card debt.
Why People Are Struggling
The reason people are racking up so much credit card debt has nothing to do with the notion that they are being careless about their spending. Instead, peoples’ incomes have simply not kept pace with basic expenses. For example, while the median household income has increased by 28 percent in the past 13 years, medical costs have soared by 57 percent and food and beverages have increased by 36 percent.
Furthermore, other debts, including mortgages, auto loans, and student loans, have all risen considerably over the same time period. These various factors have all combined to make many Americans far more reliant on their credit cards to cover even basic necessities.
Bankruptcy law
Credit card debt can quickly lead to a vicious cycle whereby people make just minimum payments and, in the long run, end up wasting thousands of dollars on interest payments. While bankruptcy is not right for everyone, it does offer a viable solution for those whose debt has gotten out of control. A bankruptcy attorney can show those who are struggling with debt how bankruptcy may be able to help them get back on their financial feet faster.