The number of people struggling with credit card debt only seems to increase each year. You may have tried to alleviate your Michigan financial burdens with little or even no success. This is because the rise in credit card debt has reached alarming heights; these are the facts of why this is the case.
Irresponsible credit card use
Most people who overwhelmed by credit card debt are between the ages of 18 and 29. This group accounts for 76% of delinquency rates. Irresponsible credit card use is one of the biggest reasons for the steep rise in debt. Younger people may not understand the rules of using credit cards and become used to regularly using their cards even for smaller purchases; this can quickly add up their debt to the point where it becomes unmanageable.
Limited introductory perks
Often, when a consumer signs up for a credit card, something attractive lures them. Usually, that is an introductory interest rate of 0% for the first year. Depending on how responsible the person is with their card, the issuer can increase the rate after that time after giving the holder a 45-day notice. This can quickly lead to significant debt for some users.
Exceeding the credit utilization ratio
People who regularly use their credit cards often fail to stay within 30% of their limit. This leads to exceeding their credit utilization ratio, which can hurt their credit score and cause their balance to be high. It can also cause their debt to rise. With so many people using their cards daily or weekly instead of monthly or less, it’s only natural that collective debt has skyrocketed. According to Experian, the average credit utilization ratio in 2022 was 28%.
Sadly, many people fall into massive credit card debt because they don’t know any better. Educating yourself about responsible usage and spending wisely could make a difference in your finances.