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Credit Card Holders May Be Affected by a Hike in Interest Rates

As Texas residents may know, an interest rate hike by the Federal Reserve may have a serious impact on credit card debt. Many analysts believe the rate will rise by 0.25 percent in September 2015. Debt owed on credit cards ranks behind household mortgages and student loans. The metropolitan area with the highest credit card balances is San Antonio, while the lowest balances are found in San Francisco.

The Federal Reserve reported that the amount of debt owed on credit cards rose in May 2015 to $901 billion, a 3.19 percent increase over the total amount from the previous May. A positive sign is that fewer households owe debt on credit cards, according to a survey conducted by a national counseling foundation. The number of individuals paying their debt balance off appears to be slowly increasing as well.

Delinquencies are falling, according to a bankers association. However, a number of delinquencies were because of the monetary crisis where large numbers of individuals declared bankruptcy to get rid of unmanageable debt loads. An analysis of federal data shows that in July 2015, the average credit card holder owed an outstanding balance of $15,863.

Options for lowering credit card debt include requesting a lower rate or waiver of late charges from the credit card company itself. One credit card survey found that late fees were lowered for about 80 percent of individuals and rates lowered 60 percent. In addition, a balance transfer with zero interest may be possible, but this method may no longer exist if interest rates go up.

When debt owed on credit cards becomes overwhelming, it may benefit a consumer to consult with an attorney experienced in bankruptcy law. There are certain eligibility and other requirements associated with filing for bankruptcy that legal counsel can explain during a discussion of debt relief alternatives.

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