Debt results when a client of a credit card company purchases an item or service through the card system. Debt accumulates and increases through interests and penalties when the consumer does not pay the company for the money spent.

Debt is easily justifiable because it seems like everyone is dealing with debt of some kind. If you have student loans or a car loan, you may even feel like the debt was justifiable. However, debt can hold you back and limit the things you are able to accomplish. If your debt to income ratio is higher than 25 percent, you may be in serious danger and your debt can do some real damage to you

According to Nerd Wallet's annual analysis of U.S. household debt, Credit card balances carried from month to month continue to inch up, reaching $435.9 billion halfway through 2019. That’s an increase of more than 5% over last year. And for Americans carrying that debt, the impact is significant. The average U.S. household with credit card debt has an estimated $6,829 in revolving balances, or balances carried from one month to the next, the analysis found. This pernicious type of debt, which often comes with high-interest rates that make it a challenge to pay off, can feel inescapable. About 1 in 11 (9%) Americans who have credit card debt say they don’t think they will ever be completely free of credit card debt, according to a Nerd Wallet survey conducted by The Harris Poll.


How credit card debt can make you poor

·      It lowers your credit score

Your credit score is determined by a number of factors and the amount of debt you have is one of them. If you have too much debt or if you are using too high a percentage of your credit cards, you will likely have a lower credit score. This, in turn, can make it difficult to borrow money and get a better interest rate on your money. Part of your credit score, exactly 30%, is based on the amount of debt you have. The more debt you have compared to your credit limits and original loan balances, the lower your credit score will be.

·      Getting a job becomes difficult

There are some jobs that require a credit check. This is usually part of the interview process, but depending on the field that you are working in, this can create a difference whether or not you find a job. If you have a large amount of debt, you may be considered a greater risk to handle certain assets within the company or for customers.

·      It Prevents you from kick-starting your dream business

Too much debt can affect your ability to open a business in two ways. Firstly, it prevents you from being able to borrow capital in order to open the business. Many banks are reluctant to give small business loans to consumers that are already carrying a lot of debt. Additionally, it may make it more difficult for you to take the risk or make the next step if you are worried about how you are going to cover your bills and stay current.  

·      It prevents accomplishment of financial goals

Monthly  debt payment can limit the amount of money you have to spend on other things, not just retirement, but the trips or vacations you've always wanted to take. The more debt you accumulate, the more your monthly payments will be, and the less you have to spend on everything else.

·      The high interest cost can be derailing

If you buy a $2,000 living room set on your credit card at 11% and only make the minimum repayment, you’ll end up paying more than $3,400 by the time you completely pay off the debt. That’s $1,400 more than the furniture cost. Even if you raised your monthly payment to $100 and paid off the balance, you’d still pay close to $220 more than the cost of the furniture.



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