It’s safe to say that Americans use their credit cards a lot. In fact, recent reports say that credit card debt topped $1 trillion earlier this year. This is a record amount, with credit card debt being as high as it has ever been.
Compared to last year, the total amount of balances that people have on their credit cards is about 8.1% higher. That may seem like a small percentage, but it’s a total of $24 billion. That’s how much balances went up merely in the third quarter of 2024, helping to reach these record highs.
Will this lead to bankruptcy cases?
This number could lead to bankruptcy cases for a few reasons. For one thing, credit cards tend to have very high interest rates. If people can pay off their balance by the end of the month, they may be able to keep the cards affordable. But as soon as they start missing payments, they could be paying exceptionally high interest rates on that outstanding balance. This is what often causes credit card debt to get out of control, even for those who are faithfully making minimum payments every month.
Rising debt levels are also indicative of cash flow issues. It may be that many people aren’t earning enough to make ends meet. However, they still have to purchase necessities like groceries, utilities, transportation, clothing and much more. They’re turning to credit cards as a way to cover the gap when their earnings aren’t enough, but that’s eventually going to create serious debt issues when they can’t pay those cards off.
If you find yourself facing bankruptcy this year, perhaps due in part to credit card spending, be sure you know exactly what legal steps to take and what options you have.