After rising in 2011, average credit card debt and delinquency rates in the U.S. declined slightly in the first quarter of 2012.
Average debt per borrower fell $242 to $4,962, while the percent of cardholders late on payments by 90 days or more dropped from 0.78 percent to 0.73 percent, according to credit bureau TransUnion.
Yet despite the declines, new research shows that American households are still depending on credit to fund standard living expenses.
According to a national survey, 40 percent of low- and middle-income households with existing credit card debt have used their cards to cover basic costs like the rent, mortgage, groceries or utilities because the cash in their bank accounts wasn't sufficient.
At the root of the reliance on plastic is unemployment and medical bills.
Not surprisingly, 86 percent of those who had spent part of the previous year unemployed had accumulated credit card debt. For nearly half of study participants, credit card balances included at least one medical expense.
Compared to overall national debt, the average debt of low and middle income families in the survey was significantly higher at $7,145.
Even if debtors can manage payments above the monthly minimum, interest rates and fees can make paying down debt a long, painful process - especially for those recovering from a period without income.
Over time, large debts wreak havoc on credit and keep consumers in the habit of living paycheck to paycheck. A poor credit history leads to higher interest rates and more difficulty qualifying for loans, which in turn solidify dependence on credit cards.
For families with unmanageable debt, filing for bankruptcy can offer a clear solution for winning back financial freedom.
You shouldn't have to pay interest on essentials like bread and electricity. If you're caught on the credit card merry-go-round, a Chicago bankruptcy filing can provide a fresh start.