It may be good or it may be bad but it’s in inescapable fact that as a nation, we have become addicted to debt–especially credit card debt.
The Federal Reserve published in January of this year consumer credit data for November of 2011. This report revealed that the total amount of outstanding debt increased at an annualized rate of 9.9% or more than $20 billion. And the amount of money owed on what’s called revolving credit (which is just about all credit card debt) increased at an annualized rate of 8.5% to $798.3 billion.
There are two ways to assign blame for all of this credit card debt. On one hand, there are people who argue that the credit card companies are to blame. On the other end of the spectrum are people who say it all comes down to individual consumers.
Individuals are to blame
This position–that it comes down to individual consumers–is basically that we are a nation of free enterprise and individualism that requires people to take responsibility for their actions. If you sign a contract you didn’t read to take on obligations you can’t fulfill, it’s all on you and you must live with the results.
The credit card companies are to blame
The fact is, the credit card companies should probably shoulder some responsibility for all this debt. Consumers make mistakes when they don’t read credit card contracts but they are often long and written in a strange legalese that many people find difficult to understand. Most consumers are not financial experts but credit card companies have people who are. If a company with experienced risk managers and complicated credit scoring systems believes you’re creditworthy, would it be unreasonable for you to assume that you are?
The subprime market
Finally, the credit card companies have been gradually shifting their focus to what is called the subprime market. In fact, 25% of new credit cards issued in the fourth quarter of last year went to subprime borrowers. In other words, these credit cards were sent to people who had less than great credit ratings.
So who’s to blame
One way to answer to this question is to say that there is enough blame to go around. There’s a case to be made that the credit card companies are asking for it when they send offers to sub-prime customers or those they know are less creditworthy. On the other hand, it might be just as rare for an individual to sign up for a credit card knowing full that he or she won’t be able keep up with the payments. It’s probably even more unusual for the credit card issuers to approve applications from people they’re sure will default. So why does this keep happening?
The author Barbara Ehrenreich has suggested that the sunny optimism that is part of the American character and that has served the country so well in the past might now come with a cost. This is because, as she has suggested, unrealistic decisions can come from this optimism and it can affect not only individuals but top executives at credit card companies as well.
Regardless of why you’re in debt
If you’re having a serious problem with credit card debt, you probably don’t care whose fault it was. What you want is to get out from under it. This is where we can help. We have experienced debt counselors who can work with your creditors to get your debts reduced as much as possible and help you become debt free in 24 to 48 months. Don’t keep struggling with that credit card debt. Call us now for immediate help or fill out the form for a free quote.