These have been tough years for the American economy with families finding it hard to make ends meet. But the fact is the level of credit card debt continues to rise at an alarming rate! In 2012 alone debt figures showed a rise of 5 per cent from the previous year on credit cards.
It’s not rocket science of course to work out if people don’t have the money, then credit cards are an option. But there’s one thing that’s been prevalent in all of this:
Low Interest Rates!
This baby keeps borrowers borrowing – great you cry? But the problem is, this leads to higher and higher credit card balances. And this in itself can be extremely dangerous and lead to a whole range of financial problems for those involved. There could be other reasons as some experts have cited. It could be seasonal? Vacations, gift time, back to college or school? Well who knows, but this isn’t the only crux of the problem.
Here’s Some More Sobering Info for You!
At September of 2012 American credit card debt stood at more than $852 billion. This really is a quite staggering figure! More than six per cent up on the previous year. The average sum of credit card debt per household was a cool $15,328.
Only mortgages and student loans are at the front of the list. Remember credit cards can be a valuable tool – but households would seem to be relying on them too much!
But Wait – The Banks Have a Lot to Do With This!
You’d think in hard times banks would be become stricter – but the fact is they have been increasing the number of credit cards they issue. Even more worrying was the fact more than a quarter of these cards went out to consumers with credit scores below 700 or ‘nonprime credit scores’, if you like! What does this mean?
BANKS AND OTHER FINANCIAL INSTITUTIONS SEEM TO BE LOWERING THE LEVEL OF BORROWING QUALIFICATIONS!
BUT OF COURSE MUCH OF THIS CREDIT IS BEING OFFERED TO THOSE MORE AT RISK OF GETTING INTO FINANCIAL TROUBLE!
Now You’re Really Interested Here’s More Fascinating Figures for You
Those credit cards overdue for payment by 90 days were 0.75 per cent up on 2011. This of course is a direct result of banks and others lowering their lending criteria
But Hang On – Won’t This Help the Economy in the Long Run?
Well to a certain degree this is true but of course individuals shouldn’t get themselves into trouble because of this. More debt means more interest – but of course this will re-route the cash flow from more essential things in households. Here’s the rub?
IF YOU DECREASE THE TOTAL OF CREDIT CARD DEBT INDIVIDUALS CAN PLAN BETTER FOR BOTH THEIR RETIREMENT AND FUTURE PLANS!
We should also remember more spending means confidence could be returning. In fact more jobs are going into the marketplace as each day passes. The end result is:
So What’s the Upshot Here?
While people are actually relying on credit cards a little less generally credit card debt is increasing. This is due to a number of different reasons. Yes this can certainly boost the economy but sometimes at great personal cost. It may spoil retirement plans or affect long term financial projects. If you can – then paying down debt instead of pushing up your spending will bring loner term benefits. But always remember credit cards can be valuable when used in the proper fashion – just be careful out there!