Credit card debt on the rise and interest rates expected to rise
Sooner or later many Michigan families need to reach for a credit card when an unexpected expense pops up. Credit card debt has become a fact of life for many American households. The Federal Reserve reports that credit card balances nationwide exceeded $1 trillion in 2017. A senior analyst from CreditCards.com has advised consumers to work on paying off their debts in 2018 because interest rates are rising. This will add to the cost of maintaining debt and could prompt more people to fall behind on payments in the near future, he said.
A study produced by CreditCards.com ranked the 25 largest metropolitan areas by their average credit card balances. Detroit came in 24th with consumers carrying credit card balances that averaged $5,889. The median income in the same metro equaled $31,921.
Washington, D.C., took the number one spot with an average debt of $7,442, but, with that metro area enjoying a median income of $46,536, the high level of credit card debt per household did not represent an unmanageable financial burden. San Antonio emerged as the urban area where consumers faced the greatest debt burden related to income. In that location, consumers had an average balance of $7,070 compared to a median income of $29,124.
When a person reaches a point where delinquency on debts appears inevitable, discussing bankruptcy with an attorney could be an appropriate step. An attorney could analyze the person’s debt-to-income ratio and explain which chapter of bankruptcy that the person might qualify for. The person might also learn which assets could be legally exempt from liquidation. If the person chooses this route, an attorney could organize financial information and prepare disclosures for the court.