Consumers all across Maryland are increasingly turning to credit cards to pay for all manner of items, from everyday necessities like groceries and fuel to season-specific items like holiday presents. And while the rise in credit cards has coincided with great economic expansion, credit card debt is a constant burden on many people.
While it’s possible to use credit cards for their rewards programs and pay off the full balance each month, many card owners roll at least some of the balance over from month to month, accruing additional fees and interest costs. Those costs can spiral to the point where it leads to damaged finances, hits to credit scores and even bankruptcy.
The increasing prevalence of credit cards
Credit cards as we know them today began in the 1950s, when financial institutions began issuing the ability for consumers to take out a monthly line of credit in card form. Since then, credit cards have been increasingly woven into the fabric of American life, with more than 80% of adults now holding at least one credit card.
A credit card doesn’t always lead to credit card debt, but the rise in credit card usage lines up with Americans holding larger and larger amounts of collective credit card debt. As of right now, credit card holders average $6,000 in debt, with 47% reporting struggles to clear their balances on a regular basis.
The impact of credit card debt
While most credit card owners are probably aware of many of the consequences of struggling with credit card debt, other consequences may not be as well known. For instance, simply drawing more than about one third of one’s available credit line will cause a negative hit to one’s credit score.
Late payments also damage a credit score. And some credit card owners may reach a point where their balance is unsustainable. At this point, they take a significant credit score hit and having to contemplate drastic measures like personal bankruptcy.
Since credit cards became widespread in the mid-1900s, Americans have been increasingly relying on them. The corresponding rise in credit card debt has troubling consequences for those ensnared by it.