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Why cardholders are late on store credit card payments

According to Equifax, the delinquency rate on store credit cards reached 4.65 percent, which is the highest it's been since 2011. There are many reasons why this is the case, such as the fact that interest rates on store cards tend to be higher than with other credit cards. The average interest rate in Ohio and around the country is 25.5 percent for a store card compared to 16.73 percent for all others.

Some consumers choose to stop making payments on their credit cards after the store goes out of business. Cardholders may mistakenly believe that they don't need to pay down the remainder of their balances. However, the lender that made the credit line available is still entitled to receive its money back. Failing to make a store credit card payment could be reported to credit bureaus, which could harm a person's credit score.

In some cases, delinquencies occur because the stores are lending to people with subprime credit scores. As a general rule, store cards are easier to get, and the strong economy has also led to loosening of borrowing criteria. Overall, Americans had $1.027 trillion in outstanding credit card debt in March 2018. That was down from $1.030 trillion in January 2018. Currently, household debt takes up 10 percent of an average household's income, which is considered low.

Those who are struggling to pay down credit card debt may want to consider filing for bankruptcy. In a Chapter 13 case, debts are reorganized and paid down over three or five years according to a set plan. If a balance is not fully repaid by the end of the repayment period, it may be discharged. As a general rule, individuals may keep a home, car or other property during the repayment period. Chapter 13 bankruptcy lawyers may help explain the potential benefits of such a decision.

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