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Why Credit Card Debt is so Hard to Get Out of

Americans are buried in debt…

According to the Federal Reserve, consumers had racked up $944 billion in revolving credit debt by the end of last year.

If you run debt up so high that you can only make the minimum payment and you will soon find yourself in a situation that you cannot get out of.

For example, if you have $17,000 of unsecured debt, like credit cards, the first $400 you send in each month won’t even reduce the $17,000, it’s just taking care of the interest. What’s more, if you miss a payment, you may get hit with the “universal default” clause that is included in most credit card agreements - which gives your credit card issuers the right to raise your rates in any way that they see fit. This can cause your interest rates to soar and, in some cases, can double your monthly payments. Penalty rates can run from 19 to 24 percent, and folks with bad credit could see a rate of 29% or more!

With hikes like these, it makes paying off your credit card debt almost an impossible feat, and leads many people having to either refinance their homes, or even claim bankruptcy.

So next time you take out that piece of plastic, you may want to rethink how much that $60 pair of shoes which is on sale, may ultimately cost you in the long run.

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