Credit cards are often the cause of consumers having to face mountains of debt with not enough funds to settle the bills. In fact, credit card debt has led to many bankruptcy filings in Ohio. One of the causes for spiraling credit card debt may be the fact that some consumers are unaware that making the minimum required payment every month is a dangerous practice.
If that is so, then why would credit card providers be happy with consumers paying the minimum payments? The truth is that those who pay their full credit card accounts every month cost the bank a load of interest that they would otherwise earn from those who simply pay the minimum amounts. Furthermore, by encouraging smaller payments, the bank will hold consumers in debt for many years.
This is the credit card companies’ way to keep consumers enslaved because the longer debts remain outstanding, the more they earn through interest. Paying the minimum on a card with a balance of $2,000 at 17 percent interest can take more than 21 years to pay off. At the end of the period the consumer would have paid interest in excess of $3,500 – not even considering that additional spending may take place on that card during this time.
Ohio consumers who have accumulated unmanageable credit card debts because they were unaware of the pitfalls of paying minimum amounts on their credit cards may find comfort in knowing that the U.S. Bankruptcy Code offers protection and a chance to regain financial stability. With the support and guidance of an experienced bankruptcy attorney, consumers can go through a means test to determine whether they qualify for Chapter 7 or Chapter 13 bankruptcy. The lawyer can explain the pros and cons of each option and help devise a plan to confront nagging debt once and for all.
Source: wisebread.com, “All the Ways Minimum Payments Are Evil“, Mikey Rox, Accessed on Aug. 12, 2016