Credit card use, debt has risen in past three years

Americans are carrying more debt than ever before. That’s the word from the Federal Reserve, which said that as of the end of last year, consumer debt totaled over $4 trillion. That’s not even counting mortgages.

Credit card debt was a significant portion of that total. The number of people with credit cards has risen to over 178 million. Many, of course, have multiple cards. The number of cards in circulation (almost 430 million) has risen almost 13 percent in the past three years. The average amount owed on each card has also risen in that period by approximately 7.5 percent to over $5,700.

This growth in credit card access isn’t necessarily because more people are good credit risks. In fact, many newer credit card holders are people known as subprime borrowers. They have credit scores under or at 600.

These low scores don’t necessarily mean they have poor credit. Many younger credit card holders just don’t have much of a credit history yet. However, younger credit card holders (in their 20s and 30s) are the most likely not to pay off their cards every month. They also tend to use their cards for everyday purchases rather than saving them for large expenses or emergencies.

Where people can get into trouble is if they think they’re keeping up with their credit card debt because they pay the minimum balances on their cards every month. As interest on the unpaid balances mounts, they fall deeper into debt. A job loss or unexpected expense can put them in serious financial peril. It can cause them to get behind on other credit products like mortgages, car loans, student loans and personal loans.

If you’re getting further in debt each month, and you don’t see a way out, it may be time to explore the option of bankruptcy. While it’s no one’s first choice, it can sometimes be the best way to take control of your finances and get a fresh start.