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If you are one of the millions of Americans struggling with credit card debt, you’re not alone. Credit card debt in the United States has been on the rise for many years, and it currently stands at an all-time high. If you’re struggling, debt relief services can help.
Did you know that the average credit card debt per household is now over $15,000? What’s more, the total national credit card debt now exceeds $1 trillion. Now that’s a lot of debt!
Of course, not all of this debt is bad debt. Some of it involved necessary expenses, such as medical bills, education costs, or opening a business. But a large portion of it is also due to unnecessary spendings, such as impulse purchases or vacations.
No matter what your reasons for being in credit card debt are, understanding how US credit card debt has changed over time can help you uncover debt relief solutions. Keep reading to learn more!
Why are Credit Cards the Leading Consumer Debt?
Since their introduction in 1950 with the Diner’s Club card, credit cards have gained popularity to the point they are now the leading consumer debt. Why is this? There are a few reasons.
First, credit cards are easy to use, enabling people to make purchases just about anywhere and at any time. Second, credit cards today come with a lot of perks, like rewards points and cash back. And third, credit cards are one of the key elements of developing good credit—accounting for as much as 35% of a person’s credit score.
While there are many advantages to using credit cards, it’s crucial to be aware of the financial dangers they pose. Because of how this unsecured debt is structured, you can easily get in over your head before you realize what happened.
Let’s examine how credit cards have evolved over time into what they are today.
Increasing Card Usage with Rewards Programs
Credit cards have come a long way since the 50s. Today, credit cards can be linked to a smartwatch so users can simply tap to pay. People also have strong incentives to use their credit cards because of an invention that came along in the late 80s—the rewards programs.
In a study by MasterCard in 2011, the company revealed that 58% of reward cardholders were extremely satisfied with their credit cards compared with 46% of non-reward cardholders. This shows just how much people are driven to use credit cards by these perks. From airline miles for free flights and upgraded seating to cash back for fuel purchases—people love rewards programs.
Of course, this means it’s far easier to find yourself in deeper debt than you planned. With unsecured debts, the minimum monthly payment barely covers the interest. This means unless you essentially pay off the card every month, you’ll be getting charged crazy amounts of interest.
While rewards programs can be a helpful financial tool, it’s important to be mindful of the balance at all times.
Credit Scores and Building Credit History
Another key factor that’s changed credit cards over time is an increase in consumer awareness about their credit score. When the internet made it possible to view a credit report whenever someone wanted, people started getting savvier when it comes to building credit.
They learned that one of the most effective means of improving a credit score quickly is by using credit cards wisely.
Because the balance on credit cards accounts for more of a credit score than any other single factor, people shifted away from personal loans and to using credit cards strategically. The downside to this is that the interest rates on unsecured debts like credit cards can vary based on numerous factors. Not to mention the rates are often high, to begin with.
This is why debt experts all agree that for financial protection, you should always be trying to get a lower interest rate. If you’ve found yourself with multiple debts that have inflated out of control, how can you get your credit card bills back in line?
How to Become Debt-Free
Getting debt relief to become financially free doesn’t have to be a fantasy. There are plenty of methods for reducing your outstanding debt so your minimum payments are manageable.
Here are some of the ways you can get debt relief sooner than later.
Pay More Than the Minimum Monthly Payments
For starters, when it comes to unsecured debt like credit cards, if all you pay is a single monthly payment that’s the minimum required amount, it’s essentially impossible to get debt relief.
This type of debt charges interest in a way that just keeps adding to your balance. So the first step is always paying more than the minimum payments the card companies ask for.
Debt Management Plans and Credit Counseling
Credit counselors offer debt relief services that can help people who just can’t seem to lower their debt payments. This debt solution involves a debt expert contacting your creditors to negotiate lower payments in exchange for guaranteed on-time payments for a set period.
Contact a Debt Settlement Company
If you’re dealing with harassing debt collection calls, it might be time to go further than what a credit counselor normally can do. Debt settlement services work by negotiating with creditors for a payment schedule that works along with reduced fees.
Often, balances that have swelled to insurmountable sums can be slashed as well.
What are Your Debt Relief Options?
It might be tempting to contact a bankruptcy attorney when the pressure of debt feels like too much to handle. When debt collectors increase their collection efforts, debt settlement companies can help you avoid bankruptcy.
Keep in mind that bankruptcy can wreck your credit for up to a decade, while debt relief through a settlement might only take a few years before you can rebuild your credit.
Finding Good Debt Settlement Companies
When you start experiencing missed payments, getting help with a repayment plan can be a huge relief. One company that can help you get your financial life back on track is Alleviate Financial Solutions.
We are here to help you become debt-free. To get started today with a free consultation, contact us at 800-308-2935 at Alleviate Financial Solutions today!
