According to a report from NerdWallet, the average American household carries $7,000 in revolving debt. That is up from $6,081 in 2017, and this figure is important because it is a more accurate indicator of a person's financial health. Tennessee residents and others are experiencing wage growth, but higher prices are playing a role in increased credit card spending. Medical costs, student loan payments and food prices are causing expenses to outpace incomes for many.
Consumer debt and cost of money on the rise
Analysts from LendingTree examined the rates of spending in November and predicted that the credit card balances of Americans would increase by at least 5 percent before the end of 2018. When the balances of credit cards rise, so does the cost of the associated debt service. People in Tennessee and across the U.S. spent more than $100 billion from January through November 2018 on credit card fees and interest, and annual percentage rates are higher than ever, averaging from 16 to 17 percent.
Credit card debt on the rise
People who are struggling with debt in Tennessee are not alone. The Household Debt and Credit report indicates that debt tied to credit cards rose by $14 billion during the second quarter of 2018 in the U.S. The average annual percentage rate on credit card debt is nearly 17 percent. Penalty APRs, which may apply after a missed payment, can be 30 percent or higher.
Creating a debt repayment strategy
Household debt for those living in Tennessee and throughout the country increased by $63 billion in the first quarter of 2018. That was the 15th straight quarter in which household debt increased. Accruing debt may make it harder to achieve long-term financial goals, so it is a good idea to create a path to becoming debt-free or being able to better manage an existing debt load.
When debt settlement could make more sense than bankruptcy
Filing for bankruptcy is often a prudent path to take for Tennessee residents who are struggling to make ends meet, but it is not the only way to escape unmanageable debt. It sometimes makes more sense to avoid the consequences of a bankruptcy by negotiating directly with lenders to reduce balances or arrange more flexible repayment terms. However, this kind of work may be best left to attorneys with experience in this area who have a strict ethical obligation to pursue the best possible outcome for their clients.
The debt gap between men and women
The wage gap between men and women is a continuing problem in Tennessee and other states. However, there is also a statistical disparity between men and women when it comes to debt.
Avoiding credit card debt
Many debtors in Tennessee who are struggling to pay their bills cut their credit cards to avoid overspending. While this may seem like a smart way to avoid new debts, credit cards can be an asset for those trying to rebuild credit.
Credit card debt settlements aren't always ideal
It may be possible for Tennessee consumers to settle credit card debt for less than what they owe. However, it is important to consider the potential consequences of doing so. For example, a debt settlement may only be available to those who can show evidence of a financial hardship. Individuals who are planning on settling their debt should also understand that they can do so on their own without going through a third party.
Credit card debt is problematic for many millennials
Student loan debt throughout Tennessee and across America has risen to more than $1.5 trillion. However, for those between the ages of 25 and 34, credit card debt is actually a larger burden. According to the 2018 Planning and Progress Study from Northwestern Mutual, credit card debt makes up roughly 25 percent of the debt burden for those in that age group. Student loan debt makes up about 16 percent of the debt burden for someone aged 25 to 34.
The process of bankruptcy and why people file
With student loan debt on the rise and families struggling with the high cost of medical care, more households may be carrying an unmanageable debt load. Some of them may want to consider filing for bankruptcy.
