New York City has the highest level of credit card delinquency rates and unpaid personal debts in the US. As of Quarter 3 of 2018, the city already had a total of $13.51 trillion. For this reason, local financial analysts and debt counselors declared the city the most financially struggling area in the US. There are several reasons why New Yorkers have skyrocketing credit card debts. For example, Rockland County residents can pay their Delinquent or Quarterly Taxes using credit cards for convenience, but allowing these to pile up can be detrimental to those who owe a lot to their credit card companies. It can also affect the city’s economy, and have major effects on both an individual and the wider community.
Effects In Credit Score
If you have a recorded history of neglecting to pay your bills on time, you will be marked with a low credit score. In New York, the average credit score is 692. If you are anywhere under the 580 mark, you already have a low credit rating, and it may be more difficult for you to get approval for a home or car loan. You may also have a hard time getting a credit card approval, and having a bad credit score can tag you as a risky borrower. Because of this, lenders and creditors can charge you with higher interest rates, which means you have to pay more than those with good credit ratings. However, settling all your outstanding balances can improve your credit score. It is possible to get a credit card application approved by proving you have a stable employment status to demonstrate that you are capable of paying your debts. In addition, opening up a savings account will encourage credit card providers to approve your application. They will be assured that you can pay your dues because you can save up a portion from your paycheck.
Effects On Health
Aside from lowering your credit score, debt can also affect your health. Those who are deep in debt may experience low self-esteem, especially if they are constantly being reminded by their lenders to pay up. Others may be affected by stress or depression, which can have serious health consequences, and can send people into a further spiral of debt and mental ill-health.
Effects On The Community
A previous report from the Congressional Budget Office revealed that the increasing debt levels may reduce a person’s projected annual income by around $2,000 to $6,000 by 2040. The government can offer lower interest rates to save the people from paying more to private creditors. However, the country will end up with slow economic growth if this is implemented.
On the other hand, debt can also have a positive effect on the community. Most Americans are borrowing money to buy a home or to go to college or university for higher education. This is good news for the country’s economic mobility. It means that more real estate properties will be sold, and more people have access to better employment options.
Incurring debt can have significant consequences, both for an individual, and for the wider community. To reduce the negative effects of debt in your life, take care to pay all your dues diligently. Aim to learn how to manage your finances properly so you do not need to borrow more money to pay for your outstanding balances, and put a stop on the loan cycle.