Credit cards can be helpful tools for California consumers who want to build credit, collect reward points or even just bridge small gaps between paychecks. While credit cards can provide a number of benefits, they also have a number of drawbacks. Consumers who struggle to pay off their balances may be surprised to realize how much interest they end up paying every month. For some, it could end up leading toward Chapter 7 bankruptcy.
Only around 40% of American consumers have credit card debt, and of those 24% owe $10,000 or more. Among all consumers with credit card debt, including those with relatively low balances, 13% say their monthly payments make it difficult to regularly make ends meet. Another 15% limit their spending because of debt. These figures are from a recent survey by a major news magazine.
What makes these figures even more troublesome is that many people are not even sure how much they are paying in interest. That same survey found 30% of consumers with this type of debt were not sure how much of their monthly payments went toward interest. Some of these consumers could be paying money toward a growing balance every month and not even realize it.
Consumers in California usually do not intend to take on so much credit card debt, and even those who do usually expect that they will be able to easily pay off their balances. The reality is that getting out of debt can be much harder than expected. For some people, it could even seem impossible. Chapter 7 bankruptcy can give these individuals a way to handle their debt in a manner that makes it easier to establish a more financially secure future.