Many people living in Massachusetts carry heavy debt loads. Unfortunately, while most of these individuals would like to reduce or eliminate their debts, they make self-defeating mistakes that can make debt management difficult, if not impossible. Financial education, combined with better spending habits, can often provide relief.
According to a survey of more than 2,000 adults, nearly 50 percent of Americans carry a credit card balance for two or more years. In some cases, Americans have been holding onto credit card balances for more than five years. This can have an impact on the finances of Massachusetts residents who carry such balances. Those who are 63 and older are the most likely to carry such debt.
The Federal Reserve says that Americans collectively hold more than $1 trillion in credit card debt. Each household has $8,377 in credit card debt. While some may advise debtors to not pay their bills, it may be better to acknowledge the issue and make a plan to resolve it instead of ignoring the debt. Massachusetts residents who may think that they will miss a payment should reach out to their creditors immediately.
Considering the low unemployment and second quarter increase in consumer spending, economic indicators appear strong in Massachusetts and nationwide. However, credit card balances continue to set records. Rates of borrowing have slowed, but the total balances owed on consumer loans like credit cards have reached a record level of $3.86 trillion.
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 in interest over a period of more than 10 years.
Massachusetts consumers may have an easier time joining with others in order to file a lawsuit against banks and credit card companies thanks to the Consumer Financial Protection Bureau. A CFPB rule issued on July 10 addresses arbitration clauses that do not allow consumers to take a case to court because the companies require alternative dispute resolution. Wells Fargo is one financial organization that tried to use arbitration to shut down lawsuits.
While many Massachusetts college students carry credit card debt along with their student loans, it appears that most millennials are responsible with credit cards. More than two-thirds have never maxed out a credit card, and most pay their balance in full each month. However, in addition to a student loan debt that was calculated to be an average of $37,172 per student for those graduating in 2016, some students are struggling with credit card debt as well. More than 30 percent of students graduating in 2017 have made a late payment on a credit card.
Massachusetts residents who have certain loans or lines of credit may see an increase in their monthly payments due to the Federal Reserve's recent interest rate hike. According to one certified financial planner, it may wise for individuals with variable-rate debt to increase how often they make payments or try to refinance their debt into loan with fixed rates.
Today, it is ideal to live a debt-free life. However, because many Massachusetts residents use credit cards, it is very common to carry a balance of debt. While many individuals rely on credit cards to cover certain expenses, consumer debt can quickly get out of hand. Although credit cards are often the culprit for getting a person into debt, they can also be the tools used to get the consumer out of debt as well.
In today's society, many residents in Massachusetts and other states across the nation seek to own what is new and in demand. Such a situation can get costly, causing some individuals to pay for these items on plastic. While it is not uncommon to use credit cards, it is becoming more and more common to carry a growing balance on credit cards, making this type of debt a problem for many Americans.