The Stats on Debt from Credit Cards
By: Aazdak Alisimo | Posted: 24th January 2008
Credit cards give millions access to easy money, but this certainly has resulted in major questions and controversies about the amount of debt being accumulated.
Credit card debt is the source of worry and anxiety. It is the source of countless jokes about spendthrift spouses and the reason for those “debt consolidation” commercials that you see on television every day. The facts about credit card debt are sometimes scary, but the blame for the problem is too often placed on the credit card company and not on the irresponsible card holders where it rightfully belongs.
It is true that interest charges on credit card balances often represent a much higher interest rate than can be obtained through other sources. This is not the reason for credit cards in the first place, however, and is in many ways an unfair comparison. It is true that each single credit card transaction represents a miniature loan from the credit card company to the cardholder. The difference is that the “loan” can be repaid without interest by repaying it within the first statement period. It can be said that it is more like a “30 days same as cash” deal.
It might be true that the credit card company offers a minimum payment amount which actually does transform the transaction into an actual loan and the credit card might be just as happy to see you make the minimum payment so that interest will accrue and increase their profits. That all may be true. However, no one is putting a gun to the head of the cardholder and forcing him to make the minimum payment.
A recent study indicated that almost 35 million American credit card holders insist on making minimum payments when they have the means to pay the balance in full. They are acting against their own best interests and it is patently unfair to fault the credit card companies for this. The credit card, like its cousin the debit card, became popular and has continued to be in demand for many reasons. They give a good record of expenditures. They restrict the amount of cash that needs to be carried. They do not exist to great debt problems.
The total amount of credit card debt is a staggering figure, but it represents funds that have been put into the economy. It is providing jobs and funding paychecks for millions of workers. Despite the occasional credit card theft or fraud case, it has made people safer by restricting the amount of cash they carry on their persons. Although credit cards attract thieves, they do not do so with the vigor of large amounts of easy to spend cash. It is a sign of an “enabling” mentality in our government that they would consider laws restricting the credit card companies as if they and not the careless and selfish habits of cardholders are the cause of credit card debt.
Aazdak Alisimo writes about issues you need to know before you get a credit card in minutes for GetaCreditCardinMinutes.com.
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Tags: credit cards, expenditures, anxiety, interest charges, cardholder, credit card debt, interest rate, debt consolidation, credit card holders, cousin, easy money, credit card balances, minimum payments, debit card, controversies, spendthrift, credit card transaction