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Americans handling credit card debt well

According to TransUnion, residents of Massachusetts and throughout the United States have done a good job of paying down their debt. This is in spite of recent interest rate increases by the Federal Reserve. However, just because people are able to absorb higher debt payments doesn't mean that they shouldn't have a plan to pay off the principal balance. Those who pay 15.5 percent interest on a $5,000 balance would pay $2,286 interest over a period of more than 10 years.

If the interest rate on that debt were to increase to 16 percent, an individual would pay an extra $100 interest. That is money that could be put into a savings account or could be used to pay down the principal balance faster. For those who don't have debt at the moment, an interest rate hike could make future debt more expensive.

A variety of debt types such as auto loans, mortgages and credit cards are impacted by rate hikes. Those who are trying to pay off debt would be wise to create a repayment plan as soon as possible. It may also be a good idea for a debtor to do a budget analysis to determine how to pay off debts without having to dip into savings.

People who are struggling to repay credit card debt may benefit by filing for Chapter 7 bankruptcy. This may allow them to have their debt discharged in a matter of months. Filing for bankruptcy also can provide at least a temporary halt to creditor harassment and collection activities. An attorney can outline the eligibility requirements.

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