Credit Card Debt 2008

The increasing level of debt of U.S. consumers is creating a burden for the economy.

Around the world, people keep their fingers crossed that saving $ 700 billion financial system works the way it is supposed to and facilitates the global credit crunch and restore confidence in markets worsening. But while the government has focused its attention on the worldwide impact of the collapse of mortgage lending and greed on Wall Street, another storm is looming.

With everything that has happened since, it is easy to forget that back in August 2008, the U.S. Treasury Department stepped in to take the reins of Fannie Mae and Freddie Mac, two government-sponsored Loan Bank housing. With the country facing more than $ 12 trillion in residential mortgages, no one would tolerate that Fannie Mae or Freddie Mac failed.

But who observes that the rest of the country goes bankrupt? The United States is rapidly moving towards the next financial credit crisis it involves credit cards, and it could be a problem facing millions of Americans, not just the owners of which are larger facing foreclosure.

Support the basic needs

Consumer spending has kept the U.S. economy growing for the past two decades. In addition to shopping for homes they had no real quality for consumers using their credit cards and revolving credit accounts to accumulate more than $ 2 trillion in household debt. Where once they were engaged in high-ticket electronics like televisions, plasma screen, automotive and appliances, today they are forced to slow down and spend more on basic necessities .

When the cash-strapped families are struggling to make ends meet because of rising prices, they rely on their credit only alternative. Consumers are pushing the upper limits on their credit cards to pay bills, feed their families and gas up the car. Some even use their cards to pay their mortgage, and that periods of disaster.

The lending industry, now forbidden to issue aggressively subprime has turned its attention to marketing credit cards with high fees, higher interest rates blew, and the words complex hidden in small print or written obscure language. unwary consumers are putting themselves up for future failures, and to do so in record numbers.

Dug in Deep

Debt and arrears on the rise

credit card borrowing rose at an annual rate of 4.8 percent in July 2008, against a growth rate of 3.5 percent in June But while the volume of purchases by credit card continues to increase, the time monthly payments are lower.

The percentage of people who were in arrears on their credit card payments rose slightly in the second quarter from the same period last year, while average debt per borrower jumped 8.6 percent, according to the agency rating agency TransUnion LLC.

For the quarter ended June 30, 1.04 percent of credit card holders were suffering at least 90 days on one or more of their cards. This compares to 0.91 percent for the second quarter of 2007, although it represents a decline of 1.19 percent in the first quarter of 2008.

The decline in the first quarter in the second quarter likely reflected tax refunds and economic stimulus checks. As crime rates tend to be seasonal, they usually go in the second quarter.

Late fees and sky high interest rates, some as high as 24 percent or more, will accumulate and may keep the stagnant economy. Every dollar that goes towards the payment of taxes and interest on credit card balances is a dollar that can not be spent on food, hardware, or Starbucks.

How did shopping on credit to get so out of control?

Technology has made it impossible to escape the temptation to whip these credit cards. Te.