Repaying Credit Card Debt. In the U.S., some statistics for credit card debt are simply staggering. As the average family usually has a
balance between five and eight thousand dollars on their credit cards, over one thousand dollars is paid on interest each year per family.
These figures mean that Americans spend over one trillion dollars each year on credit, and end up owing more than half that.
This also means that currently more than 90% of Americans' disposable incomes are dedicated solely to repaying debt. Debt continuing grow at this rate will mean that one in a hundred families will be forced into bankruptcy.
It wasn't so far in the past that being in even a little debt was considered to be terrible. Common practice dictated that you saved for products and services and bought them once you had enough money.
Further, bad credit meant you couldn't get a credit card at all. Go back fifty years and consumer debt figures were incredibly low, as they are today in most of the non-Western world.
But here in America saving seems to be forgotten. There's barely anybody saving enough for their retirement, and banks have to offer ever-higher interest rates as incentives to have people put money into a savings account. The United States especially has developed an ‘I-want-it-now consumer culture, and to an extent that we cannot afford to live this way.
Debt—A National Problem
Countless billions of dollars are being used up on expenses in the credit card industry, which only serves to charge interest on its customers. This is due to the weight of the calculations, administration and marketing needed to support the industry. For example, the average American gets at least one credit card offer in the mail every day, showing heavy and costly marketing.
These calculations are before you take into account the
money and time spent by bankruptcies in the court system, as well as the cost
to the government of providing subsidized debt counseling. Further, when these
consumers have to spend money on interest instead of products it reduces money
flow and hurts the whole economy. Few industries, or people, aren't hurt by
debt, at least in the long run.
Spending Alone Isn't the Culprit
With all of this said, don't assume that the reason you're in debt is that you haven't spent your money cautiously enough. According to current statistics, it is rare for people to get into debt only because they spend their money frivolously.
The majority of people get buried in debt due to external circumstances such as losing their job or getting sick and taking out credit cards to pay while they don't have a source of income. Thus, interest starts accumulating and their debt spirals out of control.
Overall, most people are fairly rational and understand what they can and cannot afford. The problem occurs when these people leave a balance on their credit cards and allow these rational purchases to produce heavy interest which traps them in debt.
Repaying Credit Card Debt - Related Articles:
ACCC’s Path to Financial Peace of Mind helps consumers tackle debt in a practical way that helps reduce the stress and anxiety that can often accompany the challenge. ACCC offers easy step-by-step instructions to ensure you are on your way to financial peace of mind in 2014: