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Good reasons to pay down credit card debt

On Behalf of | Jun 1, 2017 | Chapter 13 Bankruptcy |

Ohio residents who have high credit card debt may be causing numerous financial problems for themselves. Perhaps the most obvious impact is that payments can take money away from an emergency fund or retirement savings account. On average, an American household has about $5,700 in credit card debt. If it takes seven years to pay off that debt at an annual interest rate of 20 percent, an individual will pay $5,000 in interest.

That money could be put into a retirement account that returns 7 percent per year. Those who have an average amount of credit card debt lose $50 a month on average that could be put into such an account. That could translate into $25,000 in lost retirement money over 20 years. Therefore, it is in a person’s best interest to get rid of credit card debt as quickly as possible.

While it may not be easy to do so, there are steps that a person can take immediately to get a handle on their credit card debt. For instance, it may be best to start paying the cards that have the highest interest rate. It may also be a good idea to talk to a lender about possibly lowering the interest rate being paid on a card.

Individuals who are looking for debt relief may find it by filing for bankruptcy. Bankruptcy may allow debtors to have debts reorganized and repaid in a timely manner. If there are remaining debt balances after the repayment period ends, those debts may be discharged. In some cases, car loans and other balances may be crammed down, which may make them easier to pay. During the repayment period, creditors generally cannot make collection calls, garnish wages or seize assets.


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