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Federal Reserve raising interest rates could increase debts

For many people in Essex and throughout Massachusetts, debt can accumulate without realizing it. In some cases, it's due to poor spending habits. In others, it is because of necessary expenditures. Perhaps there was a job loss or some other issue that arose that made credit card use unavoidable. Rising interest rates is a problem that many debtors often find harmful to their financial standing, leading to missed payments and increased pressure from credit card companies.

A concern for debtors is the possibility that interest rates will be increased by the Federal Reserve. The amount of credit card debt across the country is more than $900 billion. This is an increase of more than three percent from one year ago. If it was possible to pay the credit card debt in full monthly, then interest rates might not be so problematic, but making the minimum payments only serves to pay a portion of the debt while accruing interest. If the interest rates are increased, then debt will grow along with it. Judging by the average amount of debt across the U.S., a rise of one percent in the interest rates would equal an extra $160 each year.

Unfortunately, not everyone can maintain control of their credit card debt. The number of people who have not been able to pay their debts and become delinquent is reducing, but it might be due to bankruptcy filings when people are facing such overwhelming financial challenges that they need a fresh start. In some cases, people are able to take such steps as asking the credit card company to waive late fees. Consolidation from one set of credit cards to another with a lower interest rate can also be beneficial.

Of course, in some cases, a person is simply not able to make their payments. It is then that they should consider options to clear their debt through bankruptcy. Regardless of how the debt got to the point at which it is out of control, there are viable legal possibilities that can be achieved with assistance from an experienced legal professional.

Source: CNBC, "Why credit card debt is getting riskier," Kelley Holland, Aug. 6, 2015

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