- Credit cards allow consumers to purchase goods and services that they may not have been able to afford otherwise. The credit card debt that results from these purchases can be quickly paid off as long as the cardholder pays the balance in full every statement cycle. Business owners often do this, for instance.
- However, far too many credit card holders believe that as long as they make their minimum payment due every month, they can work their way out of debt and quickly obtain a zero balance. The truth is that compound interest charges make it extremely difficult to pay off credit card debt in any reasonable amount of time. A common misconception is that credit card debt is tax-deductible. In most cases, the only way to deduct interest charges from debt is if the accounts are secured by a home.
- Personal finance experts differ in how they believe consumers should deal with credit card debt. While some claim that credit card debt should be aggressively paid off and avoided at all costs, others suggest that this type of debt can be a useful tool for a variety of needs.
- Interest charges and fees also work to build up credit card debt. In some instances, a relatively small balance can balloon to something huge because of the additional charges.
- The amount of credit card debt carried by each U.S. family varies, depending on the credit extended to them, as well as their spending habits of the family. The average credit card debt carried by families is around $8,000. This is a tremendous amount of money owed for revolving accounts that aren't secured by collateral. Consumers with too much credit card debt sometimes turn to consumer credit counseling services, which usually accept people with credit card debt exceeding $2,000.
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