The statistics are overwhelming and continue to get worse each and every year. In today's tough economic times it is anticipated that at least 1% or one in a hundred American families will be forced to declare bankruptcy at some point and that over 90% of an average family's disposable income will be spent paying back debts.
While definitely not a positive picture, as bleak as that sounds running won't change it but knowledge may and so, let's take a quick snapshot at a few of the current credit card debt statistics facing so many Americans today.
American consumers spend over 1 trillion dollars per year on credit card purchases. The problem is not how much people spend using their credit cards but the fact that nearly 57% of all Americans do not pay off their balance monthly. Even more disturbing is the fact that 12% of all credit card holders only make the minimum payment on their credit cards.
This means that consumers end up carry and paying interest on about $500 billion dollars in credit card debt. This translates into an average credit card balance of $4,000 to $6,000 per family, who pay about $1,000 per year in interest. In reality many people owe considerably more.
On average many Americans receive at least one new credit card offer in the mail every week. The amount of money being spent by the banks and credit card companies to sign up new cardholders is immense Card issuers spend billions of dollars administering, and marketing the various aspects of the credit card industry.
There are very few individuals or companies who can escape the consequences of large amounts of debt. The burden place on the court system by record bankruptcy filings and the cost to government of providing subsidized credit counseling, are just a two examples of how unsecured credit card debt affects the country and economy.
Debt is becoming increasingly more common; consumers with excessive debt loads have far less disposable income. The more money that is used to pay off outstanding debts means less money is being spent which causes the economy to slow or stall.
It wasn't very long ago that carrying any type of debt was considered unacceptable. The general view was if you wanted something you paid cash for it and only used your credit cards for emergencies. If you had bad credit it was almost impossible to get a credit card and your only option was to save up to make your purchase.
There are a number of reasons why consumer debt levels have reached dangerous levels, overspending is only a very small part of the problem. In reality, many people get over their heads in debt due to the loss of a job or using their credit cards to cover medical expense as result of an illness. As a result, many people end up trapped in a downward spiral of making payments on huge credit card debt levels.
Most people understand what they can afford and how important it is not to use credit cards to buy any and everything. High credit card debt is usually a combination of many things but the biggest problems result from leaving balances on their credit cards and not realizing just how quickly compounding interest and other service fees really affects their financial well-being.
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