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Credit card debt can be a serious problem

Many Kentucky residents realize that while credit cards can be very helpful, they also carry a number of downsides. Although they can help people deal with unexpected emergencies, such as vehicle repairs or medical bills, most credit cards tend to carry high interest rates and can prevent people from being able to save for the future.

In the last several decades, people's reliance on credit cards has grown enormously. As of 1976, the total amount of revolving debt held by U.S. citizens was approximately $14 billion. Today, it totals nearly $1 trillion. High interest rates merely serve to compound the problem.

Savings accounts provide a very low interest rate, less than 1 percent in most cases. On the other hand, the Federal Reserve has stated that the average interest rate on a credit card is nearly 14 percent. For some people, especially those with poor credit ratings, interest rates can 23 percent or higher. When individuals do not pay off their credit cards in a timely manner, interest rates can add a significant amount to the overall debt burden.

It is unfortunately relatively easy for some cardholders to get in over their head. When their credit card debt is beyond what they can realistically pay back, they may want to meet with an attorney to discuss whether filing for bankruptcy would be an appropriate form of debt relief in their situation. Bankruptcy is not necessarily appropriate for everyone, but in some cases it can result in a discharge of this type of unsecured debt. An attorney can explain the means test and other requirements associated with a Chapter 7 filing.

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