U.S. household average credit card debt peaked in 2009 but is still over $16K
By Barbara Craig, Attorney at Law
The average credit card debt of U.S. households peaked at $19,000 in 2009, at the height of the great recession. Since that time, the economy has been slowly getting stronger and the average American is recovering from the downturn. As of 2016, the average credit card debt balance owed by a typical U.S. household is over $16,000.
Even with things seemingly getting better, Americans are still using their credit cards like never before. Some people use credit cards only as a way to pay for routine purchases or for emergencies, with the plan to pay the bill in full each month. But many other people use credit cards to pay for everyday necessities like groceries and gas for the car. Even though they are working, the paycheck just doesn’t stretch far enough to cover everything, and credit cards fill the gap.
Average credit card debt before 1958: zero
But it wasn’t always this way. Until the late 1950’s credit cards were not available to the average American. Most people had no access to unsecured credit, or used lines of credit that were paid off within a short period of time. Everything changed in 1958 when Bank of America began offering its BankAmericard credit card. Since then, Americans have been charging away to the tune of billions per year. On average, credit card debt is the third largest debt people owe, surpassed only by student loans and home mortgages.
The vicious cycle of credit card debt
The more frequently people use their credit cards, the more likely they are to accumulate an increasing balance from month to month. It’s easy to see how many people find themselves struggling to make minimum payments and even falling behind. Making even one payment late will trigger an increase to the “default rate” – a preset penalty interest rate that can be as high as 30% on some popular cards.
Faced with an excessive amount of high-interest-rate debt, it only takes a minor bump in the road – like an unexpected medical expense, a cut in work hours or pay, or a loss of a job – to push someone over the edge. For many of these unfortunate individuals, bankruptcy is the only practical way to escape from debt they can no longer afford.
Whether you have average credit card debt or not, if you are struggling with debt, bankruptcy may be the solution. The decision to file bankruptcy is a difficult one and the process can be confusing. Contact bankruptcy attorney Barbara Craig today for a free bankruptcy consultation to discuss your unique situation. Serving clients in the South Bay area including San Pedro, Lomita, Harbor City, Wilmington, and other nearby communities.
Source: NerdWallet