According to information from the Federal Reserve, the total amount of credit card debt in the country in May 2015 was $901 billion, which is a 3.19 percent increase from the previous year. People are apparently taking on additional credit card debt and not paying their balances off, and that debt may increase even further if an expected interest rate hike takes place.
When interest rates rise, creditors often pass this on to consumers by raising interest rates on credit cards. This means that people's balances will grow at an even greater rate if they do not pay off their debt every month, even if they do not charge anything new to the card, because the cost of not paying off their debt will rise. A 1 percent increase in a credit card's interest rate would cost the average household an additional $160 a year.
However, the good news is that even though the amount of debt is increasing, the number of households with credit card debt has been shrinking. Between 2009 and 2014, there was a 10 percent drop in the number of households with outstanding credit card debt. Additionally, the number of people who pay their balance off every month has increased slightly between the fourth quarter in 2013 and the fourth quarter of 2014.
If someone has found themselves with an overwhelming amount of credit card debt, filing for bankruptcy may be a viable solution. A Chapter 7 bankruptcy can discharge many unsecured debts, meaning that the consumer is no longer responsible for them. However, not all debts can be discharged, and there are certain eligibility requirements that an attorney can explain.