Americans, including Tennessee residents, are racking up a lot of debt according to a new report by WalletHub. In 2017, U.S. consumers accumulated $92.2 billion in credit card debt, which is the most in 10 years. They also added nearly $68 billion in credit card debt in the final quarter of last year, which is the highest quarterly amount in three decades. Overall, the Federal Reserve estimates that Americans currently owe more than $1 trillion in outstanding credit card balances.
Financial experts say that one reason for the explosion in credit card debt could be that charge-off rates are historically low. In response, banks have loosened their lending guidelines and started extending credit to people with below-average credit scores. The practice could explain why the rate of credit card delinquencies jumped from 7 percent in 2016 to 7.5 percent in 2017. This is far below the 15 percent delinquency rate during the height of the Great Recession, but the uptick concerns consumer advocates.
Between the final quarters of 2016 and 2017, the average credit card debt per household increased 6 percent to $8,600. A big reason for the increase is reportedly health care costs. According to WalletHub, 62.3 percent of Americans say that part of their credit card debt comes from paying out-of-pocket medical expenses, including copays and deductibles.
Sometimes credit card debt can become overwhelming. Tennessee residents in need of debt relief may benefit by contacting an attorney familiar with bankruptcy law. After reviewing the case, legal counsel may be able to explain all legal remedies available, including Chapter 13 bankruptcy. If bankruptcy is recommended, it might stop creditor harassment, reduce debt and offer manageable payments, allowing for a fresh financial start.
Source: Yahoo, “Credit card debt has now reached pre-recession levels,” Brittany Jones-Cooper, March 8, 2018