According to a U.S. Federal Reserve Board of Governors report, outstanding total consumer credit stood at $2.752 trillion as of October 2012, up 6.2 percent from the previous month. Outstanding revolving credit, which includes credit card debt, stood at $857.6 billion for the same period, an increase of 4.8 percent over the previous month. If you find yourself in an escalating credit card debt situation, although you are not alone, you may experience more than just financial repercussions.
If you get affected by any economic downturn and your wages cannot keep up with your escalating debt, you become less able to make timely payments on your credit card. When you miss a payment, your bank may increase your interest rate, making it even harder to keep up. This causes more people to default on their credit card debt and banks that bundled credit card loans in the same manner as mortgages in 2008 may incur serious financial losses, possibly even leading up to a new credit crisis.
When you neglect to make payments on your escalating credit card debt, you may start receiving phone calls from collection agencies hired by the credit card companies seeking to receive payment. This can add to the already stressful situation of owing thousands of dollars of debt upon which large interest charges are levied. Financial stress can often be the cause of behavior that can negatively affect your health such as smoking, drinking and overeating. A sense of helplessness compounded by the lack of financial resources to pay for medical treatment may lead to depression and worsen an already bad situation.
Long-Term Debt Relief
Taking control of your debt may require years of commitment to repaying a debt relief loan and could seriously impact your standard of living. If you owed $20,000 and borrowed money at an interest rate of 7 percent to pay off the debt over five years, your monthly payment would be nearly $400 per month.
The last resort in a severe financial situation is bankruptcy. You may have reached the point where all of your credit cards are at their limit, you are using one card to pay off another and the interest charges are simply too high for you to keep up. Bankruptcy should always be the very last resort as your ability to get credit for the next several years, perhaps as many as seven, will be severely restricted.
Philippe Lanctot started writing for business trade publications in 1990. He has contributed copy for the "Canadian Insurance Journal" and has been the co-author of text for life insurance company marketing guides. He holds a Bachelor of Science in mathematics from the University of Montreal with a minor in English.