How financial confidence can lead to bankruptcy

On Behalf of | Nov 24, 2019 | Bankruptcy

Things are not looking too bad for Americans right now. The economy is performing relatively well, unemployment rates are low and there fewer delinquent credit cards than in 2009. Despite this, many Connecticut consumers might not realize just how close they are to needing bankruptcy.

With only a 3.6% unemployment rate and recent 1.9% growth in the economy, a lot of people feel pretty confident when taking on more debt. This is especially true when it comes to credit cards. However, just because people are more comfortable using their credit cards to make purchases does not mean they feel confident when it comes to paying them off.

Bankrate recently conducted a survey asking participants about debt and stress. Of those who had credit card debt, 40% said they owed more on their credit cards than they did in 2009. When asked about their current stress levels when compared to the beginning of 2019, 23% said they felt more stressed about their credit card balances. Store credit cards might be just one of the things contributing to that stress. Although in-store credit cards offer discounts like 10 or 20%, interest rates are usually high, and consumers end up paying much more than the original price.

There is nothing wrong with feeling confident about a personal financial situation, especially when that confidence is based on a stable job with a good income. This can encourage some people to take on more debt than is sustainable. Considering that the average annual percentage rate for credit card interest is around 21%, people who might otherwise be leading financially comfortable lives can quickly find themselves in need of help. Although the thought of bankruptcy might seem scary, Connecticut residents who take the time to learn more about the process may feel better about this option.