As consumers continue to recover from a nightmare stretch of financial malaise, credit card debt figures are on the rise. And these large debt figures have subsequently led to an increase in the number of Chapter 7 bankruptcy filings across the country.
To make life more challenging for consumers, credit scores are also dropping, which reduces people’s ability to borrow money at reasonable interest rates.
These two trends—rising levels of credit card debt and sinking credit scores—are address in detail below.
According to a recent report from TIME.com, credit card debt is on the rise across the United States. Eye-opening statistics include:
- Average debt. Sources indicate that the average level of credit card debt for an American household recently reached $6,513.
- Big “winners.” The TIME survey found that residents of New Jersey, Wyoming, and Connecticut hold the dubious distinction of having the highest average credit card debt amounts. The average borrower in these states owed more than $7,600 to credit card companies.
As Americans continue to pay for more and more items on credit, because they have little cash on hand, credit card debt figures will continue to rise.
If you are struggling under the weight of too much debt, you may consider taking a course followed by hundreds of thousands of consumers each year.
For more information on seeking debt relief from the federal government, contact a Chapter 7 bankruptcy attorney today.
While average debt figures are soaring into the stratosphere, the average consumer is also taking a hit to his or her credit score. Recent figures reveal some unsettling findings:
- Dropping scores. In the past three months, the average credit score for American consumers was 663, which represented a four-point drop from the same figure during the last quarter.
- Top performers. Residents of California and New Jersey bucked the national trend, as the average consumer in these states had a credit score of around 680.
- Behind the numbers. To put these numbers in some context, in order to be eligible for most lenders’ best interest rates, consumers usually need a credit score between 720 and 750. So, according to today’s figures, the average American is not eligible for the most advantageous interest rates.
When looking at the data for credit card debt and credit scores, a curious trend emerges. New Jersey, for example, has the highest rates of credit card debt, but also boasts the highest average credit score.
How can these seemingly contradictory findings be reconciled? Some observers believe that the trend is due to regional variations, and factors that occurred before the recession.
Different states set different methods for determining credit scores, and southern states typically have lower scores, which may explain New Jersey’s surprisingly sterling performance in that area, despite its high levels of debt.
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