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With credit card debt causing so many bankruptcy filings, a new study puts a spotlight on just how much North Carolinians turn to plastic these days. According to the latest numbers, the state of North Carolina ranks number three in the nation among states carrying the highest amounts of credit card debt. Kind of frightening, isn’t it?
Currently, the United States (as a whole) owes $846.2 billion in credit card debt. North Carolina, on average, owes approximately $5,748 in credit card debt per family. This is in contrast to the national average credit card debt per family, which is $5,122.
In fact, the state of North Carolina has often found itself in high ranking positions on lists like the one mentioned above. According to a 2011 list presented by Equifax, six North Carolina cities were among the top 20 in the country with the worst credit card debt problems. Topping that list was Wilmington, North Carolina. This is obviously not a one-time problem, but a financial epidemic that leads families into financial turmoil. Many people in NC are paying such high fees and penalties each year, they may feel as if they can never dig themselves out.
It may be easy to blame the credit card companies for this financial mess, pointing to some shady business practices and impossible interest rates. However, a bulk of the problem lies in how average North Carolinians tend to misuse credit cards. Let’s look at some of those right now.
What are We Doing Wrong?
Think about this fact: Several times a year, approximately 52 percent of all Americans spend more than they actually make. That means over 160 million American citizens hand over money they simply do not have. This is exactly how credit card debt gets so out of hand.
One of the most dangerous things you can do when using a credit card is to think of it as having “extra money” anytime you need it. Many people, although they cannot afford it, will purchase an expensive item using what seems like a harmless piece of plastic. But if you couldn’t afford that item to begin with, consider just how much more you’ll end up spending after you charge it to your credit card. Think of all the interest that builds up month after month on one charged item! For example, most cards carry interest rates that average close to 16 percent. If you purchase a brand new television for $800 using a credit card, you’ll pay around $10 in interest on that purchase every month. While that may not seem so bad, if you don’t pay the balance off for 12 months, you add another $120 to your total purchase price.
Interest rates aren’t the only problem when it comes to credit card debt. Every year, Americans pay billions of dollars in credit card penalties. When you make a late payment or go over your credit limit, the credit card companies penalize you with extra fees that are tacked on to your balance. These penalties are in place to limit your spending, although they ultimately increase the amount you pay.
Finally, one of the most dangerous problems with credit card spending is a lack of knowledge. For example, 36 percent of all Americans don’t know how much interest they are being charged on their credit cards. If you don’t know how much interest you pay each month on your balance, then you certainly don’t know how much you are paying out in penalties. It can come as quite a shock to see your bill jump from double to triple digits in a one month billing cycle.
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Bankruptcy and Credit Card Debt
One of the most common reasons for filing bankruptcy today is high credit card debt. This is especially true for people who are barely able to make their minimum monthly payments. Once you run into a financial problem or an emergency that requires extra money, you can no longer make credit card payments at all. The credit card company then penalizes you, throwing you into a vicious circle of debt and late fees. Once found in default, these debts are usually turned over to a collection agency.
If you are struggling with credit card debt, you are not alone. Thousands of North Carolina citizens find themselves unable to pay their bills and dealing with collections harassment. One of the best things you can do is speak to an experienced North Carolina bankruptcy attorney and find out if filing Chapter 7 or Chapter 13 bankruptcy is right for you.
Dedicated to helping residents of North Carolina find the best solutions to their debt problems. Don’t waste another day worrying about your debt. Call +1-919-646-2654 today to schedule a free initial consultation to discuss your bankruptcy options.