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You'll never believe what the U.S. government is doing with $917 billion
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How often do you swipe your credit card without considering your credit limit? When you don't have funds in your checking account, do you turn to credit cards to cover groceries, outings or bills? Have you considered what that credit card debt can do on a larger scale?
LOS ANGELES, CA (Catholic Online) - The bottom line is that the United States owes $917 billion in credit card debt.
Every swipe of your card brings that number higher, which begins a cause-and-effect model that can result, in a worst-case-scenario, another recession.
According to Nerd Wallet, the average U.S. household owes $15,762 in credit card debt. Unlike student or car loans, credit cards tend to have high interest rates.
Nine percent of the average household income, which falls at $75,591, pays $6,658 in interest each year.
So now that we see the numbers, what are we to do about our credit card debt?
"I've been there -credit card, student, personal and automobile debt," Sean McQuay, NerdWallet's resident credit card expert and former Visa strategy analyst stated.
"With tight budgeting, I've managed to pay off my credit card debt, but, like many Americans, I still carry other debt balances. But I'm working on it. Understanding debt and its underlying causes is key to our future victories over debt."
MCQuay reported: "This sounds simple, but it's crucial: You need to know how much you make and what you spent it on. Then, figure out which expenses you can cut down on. Set up an automatic savings plan and pretend that that money doesn't exist.
"Ask yourself: Do I really still need my cable subscription now that I'm on Netflix? Do I still need to have a landline phone? Do I still need that car I hardly drive? There are basic things consumers at any income level can do to increase their wealth - even if that just means being able to pay off their credit card balances faster."
McQuay admitted, "People view credit card debt as a personal failing. It sends the signal that they are not able to manage finances, and finances, for better or worse, are the easiest way to gauge your success in life."
CNBC reported such a debt can lead to a recession, with CardHub CEO Odysseas Papadimitriou stating: "With 7 of the past 10 quarters reflecting year-over-year regression in consumer performance, evidence is mounting to support the notion that credit card users are reverting to pre-downturn bad habits."
Scott Hoyt, senior director at Moody's Analytics, stated, "It is something we need to keep an eye on if borrowing continues to grow rapidly." He added that higher credit card debt would be similar to what happened in the recession, "when consumers became overly leveraged.
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So save that money, budget and stick to your guns when it comes to avoiding credit card debt! No one likes to be underwater with their finances.
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