Maryland residents may be surprised to learn that credit card debt is more common among individuals with a net wort of at least $100,000 than it is amongst those with a negative net worth. After surveying 2,547 American adults, the financial services company Bankrate discovered that 57% of the respondents with assets worth between $100,000 and $200,000 carried balances on their credit cards. Only 40% of the respondents with a negative net worth said that they had credit card debt.
The researchers put this down to the ease with which affluent Americans can obtain credit and their lack of liquidity. Many of the survey respondents had a high net worth because of the value of their homes, but real estate holdings are not a source of spending power. Overall, more than half of the respondents with revolving debt balances said that they owed credit card companies $2,500 or more, and almost 40% of them reported having balances greater than $5,000. Paying everyday expenses was the most common reason given for credit card spending.
The survey also suggests that escaping credit card debt is especially difficult for Americans in their 40s and 50s. Generation X respondents were the group most likely to be carrying debt, and more than half of them said that they owed money on their credit cards. Experts say this is likely because their resources are being drained by college-age children or elderly parents.
Credit cards companies charge interest rates as high as 25%, and revolving debt can take decades to pay off if only minimum payments are made. Attorneys with debt relief experience might explain how filing a Chapter 7 or Chapter 13 personal bankruptcy offers the chance for a fresh start and an escape from overwhelming debt. Attorneys may also clear up the many misunderstandings people have about debt relief and explain the differences between bankruptcy and alternatives like debt consolidation and debt settlement.