Michigan Credit Card Debt

Michigan (MI) is the seventh most populated state in the nation. Surrounded by beautiful lakes, breathtaking mountains and lush evergreen forests, it is easy to see why more and more people choose to call Michigan home. Located on the border of Canada and home to tourist hot spots and cultural epicenters like Detroit, Grand Rapids and Ann Arbour, Michigan is a thriving tourism state; however, despite the excellent natural resources, flourishing cities and beautiful landscapes, Michiganders are constantly struggling against debt, especially during the global economic recession. In fact, in 2009 Michigan's unemployment rate soared to 14.1%, the highest in the nation. Furthermore, MI has been ranked with one of the lowest FICO scores in the nation. Michiganders are finding themselves in a constant battle against debt with no where to turn.

Michigan's per capita income is ranked twentieth in the nation with $31,178 in 2003, much lower than the national average at $49,000. Furthermore, 13.9% of Michigan resident live below the poverty line. This is .9% more than the US average. MI's current growth domestic product has continued to slow down during the recession, with a 1.5% downturn due to dips in construction, manufacturing, finance and insurance restraining growth. This is .8% worse than the national average and Michigan ranks in the lowest quintile for growth domestic product. This downturn is partially due to the bankruptcy of Chrysler and GM, both located in Detroit, as well as the volatile stock market disruptions. What this means for the average Michigander is that credit card debt has skyrocketed, FICO scores have plummeted and it's becoming harder and harder to stay above water during this economic recession.

FICO Scores and Your Credit Reports

FICO scores are just one way in which Michigan residents are currently in trouble. Although Michigan is certainly not the lowest when it comes to FICO scores, they are certainly not the highest either. In fact, while the national FICO score rating average is 680, Michigan is at 679. Credit institutes agree that an acceptable FICO score is anything above 700. Michigan is in the lower 50% when it comes to national FICO scores. Poor payment history, outstanding debt and large amounts owed all contribute to Michigan's low FICO rating.

Michiganders, like all Americans, have discovered that one of the easiest options when it comes to purchasing everyday items is to use a credit card. Credit cards allow those who do not have the funds up front to still purchase items like furniture, groceries, toys, bills, books and anything else. More and more people choose credit cards as their preferred method of payment as it is a simple way to put off the looming debt for later and enjoy the now. However, this has become a major problem, especially during the economic recession.

Credit card debt for MI residents, like the rest of the nation, has skyrocketed in the last few years. The average American household credit card debt was $2,996 in 1990. Michigan residents now have an average of $4811.94 owing on their credit card. With an average APR of 13.63% this can add up to a lot of money going to interest instead of where you need it most. Furthermore, many Michiganders will only pay the minimum amount each month which may help put an end to those penalty fees, but it will not stop the credit card debt from piling up.

The problem with credit card debt is this: instead of using your hard earned money to pay off the bills, you are often using it to pay for interest, penalty rates and additional fees that the credit card company will charge for late or overdue payments. On a $5000.00 credit card bill with 14% interest, you are wasting $700.00 a year on interest! 40% of all Americans do not pay off their credit card bills every month. And, in 2007 alone, $18.1 billion was paid in penalty fees to credit card companies. This does not even include the interest which adds another $65 billion to banks annually.

Another problem with credit card debt is that it can sneak up on you, literally. Credit cards offer a shiny solution to your purchasing needs and many come with excellent buying incentive like rewards, air miles and discounts. However, Michiganders need to do their research when it comes to credit cards. Annual interest rates, annual purchase rates, credit limits, annual and penalty fees and interest rates are all important terms that we often overlook. It is not until the monthly statements start piling up that we start to fully understand the magnitude of revolving credit.

So now what? With a low credit rating, a mountain of credit card debt and the monthly bills tipping the "Overdue" pile, it may seem next to impossible to get out of the red and into the green again. However, it's not. There is a solution to the equation of debt. It comes in the form of debt consolidation.

Debt consolidators offer personal solutions to debt management problems. Debt consolidators in Michigan understand the struggle to make end's meat and thus they are there to help clients eliminate the ever-present debt. When you choose to consolidate your debt, you are eliminating the confusion, the exhaustion and the stress that comes with keeping track of all those monthly bills and overdue fees. A debt consolidator can sit down one on one with you and make a debt management plan. All of those overdue payments, monthly bills and credit card statements are consolidated into one easy payment that goes straight to the debt consolidator. The debt consolidator will then work on your behalf to stop those annoying debt collector phone calls and penalty fees from companies.

What else can be done? A debt consolidator is your best bet when it comes to reducing, managing and eliminating your debt; however, that is only half the battle. The other part of the reform comes from you.

• First of all, develop a budget. Sit down and make a spreadsheet of what's coming in, what's going out and additional costs. You should consider all your daily, weekly and monthly expenses including those morning lattes, weekly groceries, weekend trips to Ann Arbor, shopping sprees, Saturday night cocktails, car payments and mortgage repayments. Take a look at your spreadsheet- if you are spending more than you are bringing in, it's time to cut back on some of those luxuries.

• Secondly, always communicate. Debt consolidators are there to help. If you know that you won't be able to make your monthly payment, let them know. They will offer expert advice and work with you to ensure that you are not penalized and that you make the next payment on time.

• Third, limit your spending. This can be the hardest part but, unfortunately, limiting your spending is the only way to really manage your debt. Make the appropriate spending changes. Pack a lunch to work instead of eating out; borrow books from the library instead of spending a fortune at Barnes and Noble; choose free outdoor activities to do with the kids on weekends instead of treating them to movies, toys and treats. A few small spending changes can go a long way in your battle against credit card debt.

For MI residents across the state, there is a light at the end of the debt tunnel. It's just a matter of doing your research, making the appropriate spending changes and, above all, getting the expert advice you deserve.