Americans are having a difficult time in this recession. The unemployment rate is sky high, and many are forced to live off of their credit cards. The biggest problem is that when we borrow from our credit cards, the amount that is borrowed is substantially increased by the interest rates that are charged against the debt.
For instance, if one spouse loses a job and in order to make ends meet, $30,000 is borrowed over a period of time then interest is going to accrue. If the interest rate is 20% APR, then that means approximately $6,000 per year or $500 a month is being charged in interest. If the minimum credit card payments
are only $650 a month, then that is a lot of money that is being spent for the debt only being reduced at around $150 a month.
When something like that occurs, then there is a danger of repossession, foreclosure
, or a lawsuit being filed against the borrower. There are options to avoid those scenarios, like bankruptcy or debt settlement.