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Mixed findings in recent report on credit card debt

With the holidays fast approaching, many Wayne County residents will be faced with a difficult choice. Facing financial challenges, how does one handle the shopping season -- cut back on spending, perhaps forgoing special gifts? Or add it on to the growing credit card debt and try to pay it off in 2015 and beyond?

A recent report looked at Americans' credit card habits and found some interesting statistics. One the one hand, the rate of credit card charge-offs has not been this low in almost three decades. That rate, just under 2.9 percent, represents credit card accounts that lenders declared as a loss due to cardholders' nonpayment. Taken in isolation, that statistic would generally be good news, indicating that consumers by and large are able to make their credit card payments and not fall into default.

However, another more concerning statistic is the amount of debt American consumers are continuing to rack up. Compared to 2013, we're going to be charging at least 55 percent more money on our credit cards in 2014. The total charged in 2014 alone will top $60 billion.

We call that a concerning statistic because, even if a cardholder is able to make the minimum payments each month and not get charged off, the amount that individual is paying in interest fees could mean it will be years, if not decades, before that debt actually gets paid in full. And one could also speculate that at least some portion of the growing debt represents monthly bills and basic living expenses that people charge because they don't have the cash to cover their basic necessities.

When unexpected life changes occur, of course, credit cards can be a blessing by offering the short-term financing Michigan residents need to roll with the punches. But when debt becomes unmanageable, filing for personal bankruptcy can offer a fresh financial start. A legal professional can speak to any concerns residents may have about this important decision.

Source: Courier-Post, "Good and bad news concerning credit cards," Joseph Cooney, Dec. 10, 2014

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