According to the Federal Reserve, the total amount of student loan debt now exceeds $1.5 trillion in America. It accounts for 11 percent of collective household debt (this is second behind only mortgage debt). However, student loans are not the biggest creditor for millennials throughout Virginia and the rest of the U.S. Rather, credit card debt exceeds student debt for this group, according to the Northwestern Mutual 2018 Planning and Progress Study. Credit card balances currently makes up a quarter of the total debt burden of older millennials, aged 25 to 34.
The study makes reference to a continuing cycle of buying and borrowing through which consumers accumulate credit card debt faster and faster. Repayment of debts is a low priority, generally. Once they have their basic needs covered, Americans spend almost the same amount on discretionary costs as they put toward debt service.
Participants in the study were twice as likely to have total debts of between $5,000 and $25,000 than they were to have that same amount in savings. Only 23 percent of survey respondents reported having no debt. The 2017 survey found 27 percent of respondents with no debt.
Credit card interest rates average 17 percent for balances carried. This is significantly more than the rates charged on most student loans. Missing credit card payments can be costly too as the cardholder will incur late fees and interest rate increases.
People who are struggling to pay down personal debts may want to speak with an attorney. A lawyer with experience in bankruptcy law could help by examining the client’s situation and offering options for debt reduction or elimination. The attorney might be able to negotiate a more livable repayment schedule with a creditor or draft and file a petition for Chapter 13 bankruptcy protection.