If you carry credit card debt, chances are that your monthly payments will rise sharply this year. The Federal Reserve on Wednesday raised its key interest rate by three-quarters of a point — its largest hike in nearly three decades — in an effort to tame inflation.
Most credit card interest rates are tied to the Fed's benchmark rate. If you have a variable rate, it's headed higher.
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As inflation rises, consumers are using their credit cards more often just to get by.
In April, consumer credit card debt rose nearly 20%.
Credit card balances are also up year over year. They reached $841 billion in the first three months of 2022 and are expected to keep heading higher.
Act now
It's important to act now to control your debt.
In most cases, you can get rid of credit card debt in Chapter 7 bankruptcy. A primary reason many people file for Chapter 7 bankruptcy is to discharge (wipe out) credit card debt. In most situations, your obligation to pay the balance will go away at the end of your case- Chapter 7 bankruptcy will discharge (wipe out) most or all unsecured, nonpriority debt. Medical bills, personal loans, and most credit card debt are typical examples of unsecured, nonpriority debt you can wipe out in bankruptcy. Examples of nondischargeable priority debts that you'll remain responsible for paying include child support and certain tax debts.
