Is 2015 the Year of Debt? Why Many Consumers May Get In Over Their Heads This Year

In debt in 2015? Watch out for easy credit!

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2015 is well under way. We're one-fourth of the way through the year - for those among you that made a New Year's resolution to be smarter with your money, how are you doing? Now that the economy is improving, and people are back to work, credit is loosening which means you may have more access to get yourself into more debt this year. Here are some of the anticipated changes in finances and credit this year that may impact you so you can prepare and not get in over your head.

Credit card interest rates set to rise

Brigham Young University Professor of Finance Denny Brown says he expects “credit card interest rates to rise.” Interest rates overall are low right now, but if you have a less than stellar credit rating, you may already have high-interest rates. The expected increase could drive these up further. And remember, if you are late on a payment, your credit card company can slap you with a penalty interest rate that can be drastically higher.

Credit will be more available

CardHub has predicted that credit will be offered more abundantly this year which means your mailbox may be clogged with offers. If you don't have many credit cards in your wallet or your car is getting older, you may be tempted to snap up these credit offers. Plus, it makes you feel good to be offered new credit. But if you get too excited and start taking every offer, you may find that you can't make your payments. Be conservative.

Credit card balances will rise

According to CBS News, American consumer credit card debt is ballooning dangerously. Between 2013 and 2014, credit card debt rose by more than $57.1 billion and we're on track to hit $60 billion this year. The average American household credit card balance is roughly $7,200 with experts at CardHub estimating that $8,300 of plastic debt is unsustainable for most.

Jill Gonzalez from CardHub says, "That $8,300 figure was the average credit card balance back in the throes of 2008 when the economy started taking the downturn.” She adds that this new growth in credit card debt “is a sign that Americans haven't really learned their lesson. Their attitude toward credit card debt hasn't improved since the recession."

How high is your credit card debt? Increasing consumer confidence, increased employment levels and easier credit are all feeding this trend.

What do these trends mean to you?

For many, the easy spending and looser credit represent a slippery slope. And for those already in debt, it can be a fall off of a financial cliff. Those already in debt may turn to credit cards when their cash is tight, and they need to pay bills. And if you already have high credit card balances, you may be struggling to make only minimum payments. This strategy will see you remaining in debt for years to come and putting your credit rating at risk.

What can you do if you're over-extended?

If you already know you're in over your head with your credit, you may be living paycheck to paycheck and unsure how to get out of your mess. If you can afford to pay more than minimum payments, definitely do and cut down your spending to devote as much cash as possible to eliminating this debt. Once you've cleared your cards, never charge more than you can pay off in full each month.

And if you are truly in over your head and simply cannot afford to service your debt, you may need a serious intervention. Bankruptcy may be the answer to get the financial fresh start you need. Contact the North Carolina bankruptcy experts at the law offices of John T Orcutt to find out more. Call +1-833-627-0115 and ask about our zero down bankruptcy specials.