Credit cards can be very useful, but they are also problematic when used the wrong way. Millions of Americans have credit card debt that is difficult to get on top of.
What are some of the leading causes of credit card debt in the U.S.?
High interest rates
Credit card companies make profits from interest rates. While reputable companies may offer reasonable interest rates, this isn’t always the case. Credit cards have a minimum monthly payment amount. In many cases, this barely covers the interest and does not reduce the overall debt. Debtors can be left in a vicious circle of making regular payments but never reducing their total debt.
Unexpected emergencies
Credit cards can be helpful in emergency situations. They can cover medical expenses, vehicle repairs, housing improvements and much more. However, problems can arise when income does not match expenditure. Medical costs, especially, can be overwhelming. A person may have to pay charge an amount that they have no realistic prospect of ever paying back.
Exploitation
Most people only have limited knowledge of interest rates and how to manage credit efficiently. Credit card companies know this and can take advantage of it This is especially the case for less reputable lenders. Without detailed knowledge of finances, it is very easy to fall into serious debt with an unreputable lender.
If you are in debt, you do have options. You don’t have to face debt on your own. Seeking legal guidance can be a helpful first step. Doing this will help you learn about your rights and options for dealing with your debt.