For the first time ever, total credit card debt in the United States is approaching a trillion dollars. Instead of learning painful lessons from the last recession, Americans continue to make the same horrendous financial mistakes over and over again.
In fact, U.S. consumers accumulated more new credit card debt during the 4th quarter of 2015 than they did during the years of 2009, 2010 and 2011 combined. That is absolutely insanity, because other than payday loans, credit card debt is just about the worst kind of debt that consumers could possibly go into. Extremely high rates of interest, combined with severe penalties and fees, can choke the financial life out of almost any family in no time at all.
These days, most Americans use credit cards for various purposes, and they can be very convenient and, if you pay them off every single month, they don’t become a problem. Unfortunately, a lot of people are not doing this. According to CNBC, total U.S. credit card debt rose by an astounding 71 billion dollars last year alone…to $917.7 billion, according to a new study from CardHub.com…”Credit card users are reverting to pre-downturn bad habits,” CardHub CEO Odysseas Papadimitriou said in a statement…That brings dollars owed to credit card companies by each debt-saddled American family up to $7,879, the highest since the Great Recession…
In America today, 37% of all households maintain credit card balances from month to month, and the average level of credit card debt for those households is $15,700…What most people don’t realize is that by letting balances run from month to month, you can end up paying just about as much in interest as they did for the original purchases…assuming that all payments are made on time, but a single late payment can trigger higher interest rates, penalties and fees that can be absolutely suffocating. In fact, some people end up paying back three, four or five times as much as they originally borrowed to the credit card companies.
If you use credit cards for convenience or to buy things online or to automatically pay bills, that is fine. Just don’t let balances accumulate – that can be financial suicide – because you definitely don’t want to be saddled with high levels of debt as we head into a new global recession…
Now is not the time to be living on the financial edge.
By Michael Snyder (theeconomiccollapseblog.com) – The article above is an edited ([ ]) & abridged (…) version of the original to provide a fast & easy read.
“Follow the munKNEE” on Facebook, on Twitter or via ourFREE bi-weekly Market Intelligence Report newsletter (see sample here , sign up in top right hand corner)
The final effort in the debt-fueled “recovery” of the U.S. economy from the Great Recession – the increase in consumer credit card debt – is seen by Equifax as that of “American consumers…getting on with their lives.” Yes, indeed, their lives as debt slaves!