An increasing number of people in Houston and across the country are finding it difficult to pay the bills for their store-branded credit cards. Delinquencies of 60 days or greater on the payments for these bills have gone up to 4.65 percent as of May 2018, an increase from 4.08 percent in March 2017. This is the highest rate of default that Equifax, the credit bureau, has seen for this type of card since 2011. The agency warned that it could be a sign of growing trouble for household debts across the board.
However, the credit bureau also pointed to confusion about the need to pay off credit card debt on store cards after the retailers themselves went out of business or declared bankruptcy. Contrary to some people's belief, these credit cards are backed by other lenders that are still collecting the debts. Creditors of bankrupt retailers may be more persistent about collecting any sums owed.
There are other factors contributing to the growing default rate on store credit cards. For example, there are more people being approved for these cards despite not having the income or credit score that might normally support a grant of credit. In addition, the high interest rate on these cards can make them even more difficult to repay. While the average credit card interest rate is 16.15 percent, the average interest rate for store cards is almost 10 percent higher at 25.5 percent.
Many people find themselves buried in debt and unable to repay it, facing a spiral of interest charges, late fees and collection calls. When people face overwhelming debt, there are options to find relief. A bankruptcy lawyer may assist people in filing for Chapter 13 bankruptcy and organizing a payment plan to help them find a new financial freedom.