Christopher Todd Morrison, P.C.
Affordable Bankruptcy
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How credit card debt impacts a person's life

According to ValuePenguin, the average American household has roughly $5,700 in credit card debt. However, those in Texas or elsewhere who are between the ages of 45 and 54 have $9,096 in credit card debt on average. Those who are under 35 have the lowest average credit card debt with $5,808. While credit cards may seem like an easy way to finance a person's lifestyle, credit card debt can have long-term implications for an individual.

First, credit card debt payments may take up a large portion of a person's income. If a person had a $5,700 credit card debt that took seven years at 20 percent interest to pay off, he or she would pay an additional $5,000 in interest. Furthermore, that $127 monthly payment could be used to create an emergency fund or for other more useful purposes.

Credit card debt can wreak havoc with a person's credit score if it is not paid on time. This may make it harder to get a mortgage without a large down payment. Having too much credit card debt may make it harder to save for retirement. More importantly, money that goes toward credit card debt instead of a retirement account is not able to compound each year it is in that account.

People who are struggling with credit card or other types of debt may wish to file for Chapter 13 bankruptcy. Doing so may make it possible to reorganize debts and pay them off over a three or five year period. During the repayment period, creditors are generally unable to pursue collection actions such as a foreclosure or repossession. This may provide a debtor with enough time to renegotiate the terms of a secured loan such as a mortgage.

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