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2014 may be the year to pay off credit card debt

When the new year rolls around, some consumers may resolve that this is their year -- they're going to pay down their debt. For Washington consumers, there couldn't be a better year to do so. With rates as low as they're likely to be for quite some time, it may be the best time to make a dent in credit card debt.

On average, credit cards are accompanied by an annual charge that hovers near 15%. While this percentage can fluctuate depending on a consumer's credit, someone with very good credit might see a rate in the single digits -- this is likely to increase in 2015. In 2008, the Fed began to purchase bonds monthly. This simple act kept interest rates low.

However, the Fed will soon be tapering off of these monthly purchases. Interest rates for long-term loans and investments have increased already. With credit card interest rates poised to increase, 2014 could potentially be the best year for paying off debt. For a consumer with $5,000 worth of credit card debt, an increase as small as 5% in the interest rate would bump up the total interest owed for the year by over 50%.

While 2014 may be the best year for some to pay off their debt, others in Washington might find that they are buried under more credit card debt than they can handle. Lower interest rates might not mean much when a consumer is already struggling to meet minimum payments. After careful evaluation of incurred debt and income, consumers may find that filing for bankruptcy can provide financial relief from bill collectors and bloated credit card bills.

Source: money.cnn.com, Why 2014 is the year to get out of debt, Melanie Hicken, Jan. 8, 2014

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