Credit cards can be useful and millions of Americans take advantage of them each year. However, credit cards are not risk-free.
Credit cards have become a significant source of debt in the U.S., with millions struggling to pay off their balances. What are some of the most common causes of credit card debt?
Emergency scenarios
Millions of people live from paycheck to paycheck with little margin for the unexpected. Nonetheless, emergency scenarios can happen. For example, if someone falls ill or has an accident, they may need expensive medical treatment. Without savings, a credit card can cover these emergencies. However, the balance still needs to be paid off at some point.
Temptation to overspend
Overspending isn’t always careless, and with a credit card, it’s actually quite easy. Dining out or buying a new coat aren’t necessarily lavish purchases, but they still add up. Even living slightly beyond your means through credit card use can rack up significant amounts of debt.
High interest rates
Credit cards have different interest rates, and some credit card companies are more reputable than others. It is not uncommon for interest rates to exceed 20%, making it extremely difficult to pay off balances or even make a dent in the debt.
If you are in debt, it’s important to know that you are not alone. Taking proactive measures can help alleviate some of the financial strain. One step you may want to consider is looking into your legal options.