Today the San Francisco Chronicle ran a story that the credit card debt per borrower was 4.9% higher than from a year earlier. This practice is not good for people in debt as credit card debit is difficult to overcome due to its high interest rates compared to other forms of debt such as mortgage debt.
Here are the main reasons for the increase in credit card debt in 2012 compared to 2011:
1. Banks have increased the amount of credit cards they issue. In Q2 of 2012 banks issued 3.1% more credit cards than they did in Q2 of 2011. With this increase banks have increased the percentage of people they issue credit cards to with bad credit from 25% to 30%. Many banks and financial institutions by lowering their standards for borrowing are giving more people credit cards who are prone to making significant credit card debt mistakes.
2. The economy is not great and people still want to and need to buy things – as a result they put it on their credit card.
Total American credit card debt stands at a stunning $852 billion dollars. This is up more than 6% from 1 year ago in September 2002. For households that have credit card debt the average mount of debt is $15,328. Yet, at least consumers are not as bad as the U.S. Government which has a debt level of $16 trillion dollars which puts every American’s share of the national debt at $52,001.89.
My thought: yikes! We are all collectively headed for a train wreck. If we as individuals and as a government lived within our means tomorrow would look much brighter for all of us.
