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Federal Reserve study highlights Millennials' credit card debt

Credit card debt is a fact of life for most Massachusettians. That is one conclusion confirmed by a recent study from the Federal Reserve Bank of Boston. According to the study, only 35 percent of Americans between the ages of 25 and 50 pay their credit card balances in full every month. Most people carry a balance from one month to the next, and pay interest for the privilege.

Massachusetts residents may be interested to learn that most Americans are consistent in their credit card habits throughout their lives. People who restrict their spending and pay off their balances regularly tend to do so consistently. By the same token, those who carry revolving balances from month to month tend to maintain that practice. The study also found that when a credit card company increases a cardholder's credit limit, cardholders will generally borrow more.

The study also shed some interesting light on the credit card habits of part of the millennial generation, usually defined as those currently between ages 18 and 34. The study found that the card companies increase the credit limits of people in their twenties by an average of 450 percent during that decade of their lives. Not coincidentally, the study also found that this age group increases their credit card debt by about 300 percent over the same time period.

Credit card debt can mount up rapidly to the point that the cardholder can afford only to make the minimum payments every month -- or worse, be unable to make even those payments. A Chapter 7 or Chapter 13 bankruptcy filing can provide a way out for individuals facing overwhelming credit card debt.

Source: Fortune, "Credit Card Debt Usually Begins Early for Americans," Andrew Zaleski, Feb. 9, 2016

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