Credit card debt is on the rise
In Mississippi and throughout the nation, fewer people are defaulting on their credit card debt balances. This is according to the S&P/Experian Consumer Credit Default Composite Index. However, debt levels for U.S. consumers are increasing. If a cardholder does not make payments on a card balance for six months or more, the debt may be charged-off. This can have a profound impact on a person’s credit score as well as on his or her ability to get another card in the future.
Damage to a credit score begins as soon as the first payment is missed. Missing a single payment could make it harder to get a loan because it will result in a lower credit score. Of course, having a poor credit score or history doesn’t mean that a person can’t get a credit card. As economic conditions improve and defaults drop, lenders tend to allow a wider range of people to obtain credit.
The interest rates of credit cards tend to be higher than those charged by home and auto lenders. The average interest rate is 17 percent, but it could go up to 30 percent after a missed payment. Generally speaking, those with better credit scores get better interest rates. To avoid a credit default, it is important to not charge more than what can be repaid at the end of the month.
Filing for bankruptcy may be ideal for those looking to overcome financial challenges. For instance, it may be possible to have credit card and other unsecured debt balances discharged. This could happen in a matter of weeks in a Chapter 7 case. Those looking to retain property during a bankruptcy may benefit from a Chapter 13 debt reorganization. During the repayment period, creditors are barred from taking most collection actions.