New research from the Federal Reserve Bank of New York finds that young adults born between 1995 and 2011 are especially struggling with credit card debt. The report shows that more than 15% of young credit card borrowers have maxed out their credit cards. This compares with only 5% of baby boomers and only 10% of Gen X and Millennial borrowers who have reached their credit card limits. The Reserve Bank also said that severe credit card delinquency (delinquency in excess of 90 days) for all borrowers has reached nearly 11%, the highest in nearly twelve years. Delinquency rates for all borrowers and all debts other than student loans have been growing in the last four years.
The research shows that the median credit card debt for millennials exceeds $16,000 and the credit card debt for Gen X borrowers is nearly $22,000. Over $1.1 trillion is now owed to credit card companies. With average credit card interest rates nearly 21%, credit card borrowers have little opportunity to pay down debt if they’re only making minimum monthly payments. Just making minimum payments likely means that borrowers will remain in debt for decades. For example, it would take 18 years to pay off the nationwide average credit card debt of $6200 if only minimum payments are made.
I recommend to potential clients that filing bankruptcy makes far more sense if they can’t be out of debt in 2-4 years. No matter what type of bankruptcy is filed a person will owe no unsecured debt (medical bills, credit cards, etc.) in just five years. In my opinion, life is too short, with far too many other things to do with our money then to spend decades trying to pay off debt. Filing bankruptcy and discharging the debt is a better approach and I feel no pity for credit card companies who believe they deserve 21% interest. If you’re interested in discussing filing bankruptcy and starting fresh contact my office.
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