New research shows that credit card debt can be a financial burden for millions of Americans.
“Post-credit cards are a way of paying back debt,” says David Schlesinger, a senior vice president at Moody’s Analytics.
“That debt gets written off by the company and is taken out of the bank account.”
“Credit card debt has increased by nearly $1 trillion since 2010 and about 25 million Americans now have credit card balances,” he says.
In addition to being more burdensome to people in many states, post-paid credit cards can also increase the likelihood of people becoming late payments on their debts, the National Credit Union Administration reports.
“The reality is that we are going to get worse debt,” Schlesingers says.
“We’re going to be adding more debt.”
According to the research, post credit card credit card use is up almost 20 percent in the past year.
This can make people less likely to make payments on debt and can make it more difficult to pay off those debts in the future.
Schlesinger says the problem will only worsen as the economy continues to struggle with a drop in oil prices and the need to hire workers.
According, there are about 4.4 million people in the United States with credit card debts, or around 10 percent of the total population.
The number of people with credit cards has increased nearly 20 percent since 2010, and nearly 25 million are now debtors, according to Moody’s.
While the average credit card balance is now $3,000, credit card holders can pay off their credit cards at the bank with an average annual interest rate of 4.1 percent, or about $400,000.
What’s the impact?
“The impact on your credit card account can be enormous,” Schleinger says.
“It could be more than $1,000 in interest and it can cost you thousands of dollars in fees, plus interest and penalties.”
Schleinger points to the example of someone who paid off a $600 credit card in two years, but still owes $1.5 million in debt.
As long as credit cards are being used to pay for things like groceries and gas, it can add up to huge amounts of debt.
“If you’re taking out a credit card to buy groceries, it could cost you over $1 million in interest,” he said.
“And that’s if you’re using the card in the first place.
If you’re just buying gas, and that goes up by about $200,000 a year, it’s an enormous amount of debt.”
Read more about credit card companies, credit cards, credit, debt, postcredit card source MSNBC