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Credit cards can lead to "bad debt"

Many of our Escondido readers have probably heard financial "experts" opine on the difference between "good debt" and "bad debt." For instance, a mortgage is often considered to be "good debt" because as a homeowner repays the loan they are building equity in what was once considered to be a very safe investment - real estate.

Unfortunately, for many Americans, these days there is no good debt and bad debt, there is just crushing debt. A recent article noted three types of debt in particular that are especially bad for consumers, and credit card debt was one of them.

As the article notes, credit card debt can be difficult for an individual or family to overcome. When a consumer carries a balance, which means that a credit card's debt isn't paid off in full each month, the interest rates can be crippling. The exact interest rate someone gets on a credit card can vary greatly depending on the person's credit score when they apply for the card, but some people face interest rates close to 30 percent.

Suffocating credit card debt is just one of many financial challenges that millions of Americans are dealing with each and every day. When a debt burden gets to the tipping point, which is often when it becomes obvious that monthly payment obligations are outstripping monthly income, many individuals and families will consider the pros and cons of filing for bankruptcy. Filing for Chapter 7 bankruptcy in particular can be one of the best options for eliminating credit card debt. An Escondido resident who files for bankruptcy may have to rebuild his or her credit after the filing, but it is often worth it in order to get back on track financially.

Source:, "3 types of debt you don't want," Alexander MacLennan, Aug. 30, 2014

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