Credit cards are convenient ways to purchase goods and services when you don't yet have the cash on hand to pay for them. But credit card companies aren't acting out of the goodness of their hearts when they give consumers this convenient tool. They make money by charging interest.
When consumers can't or don't pay off their balances at the end of the month, their unpaid balance gathers interest rapidly. The average annual percentage rate for credit cards is 17.73%, higher than the highest rates for private loans and more than double the rate for federal student loans.
A recent study found that 23% of Americans say that they are amassing debt by using credit cards to pay for basic necessities such as food, rent and utilities. The problem is especially difficult for college students. Another study found that 36% of college students hold more than $1,000 in credit card debt.
Many of these students are also amassing debt through student loans. When they graduated and combine that debt with unpaid credit cards, many young people will have a heavy weight holding them back just when they are starting out in life.
Whether you're a recent graduate or someone who has been out of school for many years, credit card debt can hold you back from your dreams. An unexpected financial blow, like a job loss or an illness, can make it nearly impossible to get out of debt on your own. Seek out help from a professional with experience in debt relief.