Falling deeper and deeper into credit card debt is easier than some California consumers might think. After all, credit card companies generally make special offers to their customers, including things like temporary low interest rates, rewards points and more. Unfortunately, spending in order to earn those rewards might not pay off. Instead, it could be leading some people further and further into the kind of debt that only Chapter 13 or Chapter 7 bankruptcy can address.
In Jan. 2019, Americans carried an almost record amount of credit card debt -- $1.034 trillion. While this much credit card debt can be attributed to a number of factors, part of it might be consumer confidence. Currently approximately 66 percent of people in the United States believe the economy is in good shape. That is 17 percent more than back in 2009.
However, faith in the economy does not help when it comes time to making monthly credit card payments. In 2018, consumers paid $113 billion in credit card interest alone. Consumers paid 12 percent more than they did in 2017, and they are predicted to pay as much as $122 billion by the end of 2019. Growing balances and interest rates could be to blame, especially since the average annual percentage rate is now nearly 17 percent.
Interest rates can make seemingly small debts quickly spiral out of control. Some people in California might find themselves only paying off that month's interest just to find out next month's bill is still bigger than the last. While most consumers genuinely want to repay their debts, there may come a point when this is no longer an option. In such situations, Chapter 7 bankruptcy can help people effectively discharge their debts.