Managing life with credit cards is not always easy. Although some consumers in Virginia do manage to pay off their balances every month, many more struggle with constantly growing balances and high interest rates. Despite these challenges, consumers managed to pay off a considerable amount of credit card debt in 2020. Unfortunately, this trend appears to already be reversing, which could put some people in a position where bankruptcy might be the most appropriate option.
Paying off credit card debt
Americans managed to pay off a collective $80 billion in credit card debt during 2020. In the first quarter of 2021 alone they paid off a record $56 billion. Considering that the average credit card carries an interest rate of around 18%, paying off any amount of debt can have a tremendous impact on people’s financial situation. Some of the reasons that people were able to pay off so much debt is because of significant limitations for spending on other things, such as:
- Dining out
- Shopping trips
This trend toward paying off debt does not appear to be long lasting, though. WalletHub predicts that consumers will probably add around $60 billion back to credit balances throughout the rest of 2021. Considering that the average credit card balance is still approximately $7,519, some consumers could find themselves in the exact same positions where they started.
Paying off debt can sometimes feel like running in an endless loop. Even Virginia consumers who diligently pay their monthly bills find that their efforts are minimized by high interest rates. When this type of debt begins to negatively impact one’s financial situation or even make it impossible to meet other financial needs, it may be time to consider whether bankruptcy could be an appropriate option.