Debt Costs Everyone Money

Category: Finance, Credit.

Do you have any idea just how common credit cards are? The average family carries a balance of between$ 5, 000 and$ 8, 000 on all their credit cards, depending on which figures you believe.

Let s take a look at a few statistics from the USA. Over$ 1, 000 per family goes on interest every year. Overall, Americans spend over$ 1 trillion every year on their credit cards, and owe more than$ 500 billion of it. And that s just the average- some people owe much more! If debt continues at the current rate, then one family in a hundred will be forced into bankruptcy. Whatever happened to saving? Over 90% of Americans disposable incomes are spent paying back debts.

Debt Costs Everyone Money. The weight of the calculations, administration and marketing needed to support the industry is immense- the average American gets at least one credit card offer in the mail every day. Literally billions of dollars are being used up on expenses that are only created because of the existence of the credit card industry. That s before you take into account the burden bankruptcies put on the court system, and the cost to the government of providing subsidized debt counseling. There are very few industries or people that aren t hurt by debt, at least in the long run. You might also note that consumers with more debt have less to spend- and when money isn t flowing, it hurts the economy.

Debt is Much More Common Than It Used To Be. When you wanted something, you saved up for it, and bought it once you had enough money. It s not so long ago that being in even a little debt was considered to be absolutely terrible. If you had bad credit, you couldn t get a credit card at all. In the West, the art of, though saving seems to be a lost one- almost no- one is saving enough for their retirement, and banks are having to offer ever- higher interest rates to get people to put money anywhere near a savings account. Go back fifty years and consumer debt figures were absurdly low, the same way they are today in most of the non- Western world.

We have an I- want- it- now consumer culture, and we re willing to pay more than we can afford to fund our lifestyles. Now that I ve said that, don t think that the reason you re in debt is that you haven t spent your money cautiously enough. Spending Isn t To Blame. According to statistics, it is very rare for people to get into debt because they spend their money frivolously. Their debt spirals out of control from just a few thousand dollars borrowed to pay for essentials. Far more people get buried in debt because they lose their job, or get sick- they take out credit cards to pay for basic expenses, and fall into the interest trap.

Most people have a reasonable sense of what they can afford, and won t go out and use credit cards to buy things that they wouldn t usually be able to pay for. The problem is simply a matter of people leaving their balances on credit cards for too long, not realizing just how high the interest really is.

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