Increasing Credit Card Loans
Americans love
swiping their plastic cards above their means without realizing financial
ramifications, which have led to many scary statistics on debts over time.
About 26% of consumer
debt falls into a credit card while the rest 74% includes loans, borrowed money. Based
on gathered information, U.S. Census Board stated that an American cardholder
has an average of eight credit cards making a total of 1.2 billion credit cards
with the overall population. House owners spend around 16% and Renters about 25% of
their earnings to pay off their credit card bills, house loans, education loans.
In 2009, there was a loan of around $12,500 per person and a total of $1,944
billion on overall Americans [“Consumer Debt Statistics”, September 2019].
On analyzing historical
trends in financial obligations, it seems that people are getting overloaded with
debt at a very frequent rate. “Graph 1” shown below displays a huge growth in debt
in 2017 as compared to a very constant phase of the 1970s. At present, the total debt
is around $4 trillion, which is very huge. “Graph 2” illustrates debt per
person, which has again risen up approximately from $160 in 1950 to $12,000 in
2017 [“Consumer Debt Statistics”, September 2019].
 |
Graph 1
[“Consumer Debt Statistics”, September 2019]
|
 |
Graph 2
[“Consumer Debt Statistics”, September 2019]
|
Some eye -
opening statistics were found in a credit card research held at Georgetown
University which depicts the habits of thousands of individuals. There has been an enormous increase in the number of individuals seeking credit counselors. Though
college students tend to pay off their bills but they are late payers and hence
most of them suffer from huge interest amount.[“Credit Card Debt Statistics”,
September 2018]
Almost everyone
now and then suffers from financial distress but very few actually notice the path along which they enter into such a state. There are a few alarming signs that may
trigger an alarm to one’s consciousness. [“Staying Out of Debt”, September 2018]
· continuously paying minimum due amount rather than complete payment
· mostly relying on credits than hard cash
· reaching cards limit often
· having a saving account used up in paying bills or not having one
· find it hard to scrounge money to put in savings
· Postdated checks
· Calls from agencies asking reminding for dues
· Increasing due to one card to pay up another
Effects
of Credit Card Debts
There can be
many direct and indirect consequences of not managing one’s finances. Debt
starts with very small but with time it can go out of control and could lead to
family bankruptcy, losing home to foreclosure. Scary Statistics that explains
the reasons behind financial distress.[Mike Brown, September 2018]
·
49.6%
failed to learn about “how to use credit card” at high school or college
·
54.5%
of people use personal loans to pay off their credit card bills
·
15%
are not showing any effort in repaying their debts
·
23%
are aware of their inability to pay off their debts
The effects of debt
on people are shown below in “Chart 1 and Chart 2”.[Mike Brown, September 2018]
Chart
1. [“Mike Brown, September 2018]”, September 2019]
Chart
2[“Mike Brown, September 2018]”, September 2019]
Strategy
to Manage Credit Card Debt
Regardless of continuous
efforts in direction to manage finances, many are ignorant of their actual
state in terms of Income, Expenses, and Debt. It’s good to analyze one’s all
available sources of income which may be both passive or active, listing down
all household expenses and calculating overall debts that may be under credit
card, borrowed money, loans. With strategic planning, it is possible to
achieve a debt-free life.[“Stay Out of Debt, September 2018]
· Use hard Cash instead of a card, it teaches a disciplined approach towards money
· Pay bills on time to avoid interests
· Talk to credit counselors to check one’s finances
· Start collecting emergency fund to help with a difficult time
Graph
3 [“Consumer Debt Statistics”, September 2019]
Though it may
be possible to check one’s ways of handling credit cards, managing finances and
finding some temporary relief but the problem lies somewhere else. There is a
huge difference in the average between individual earnings and their
expenses. With an increasing income with time, there is a corresponding greater
increase in expenses and debts and hence it is very important to find a balance
between these two. Some of the statistics were recorded by utilizing data
sources from Federal Reserve as well as the U.S. Census Bureau showed In “Graph
3” below which shows that the debt rate increased by 70% than income from 1980 to
2018 [“Consumer Debt Statistics”, September 2019].
Keywords: Debt, Finance Distress, Credit Cards, Loans,
Physical Stress, Expenses, Income
References :
·
Consumer Debt Statistics. (2018, Sept 19). https://www.money-zine.com/financial-planning/debt-consolidation/consumer-debt-statistics/
·
Credit
Card Debt Statistics. (2018, Sept 19). https://www.money-zine.com/financial-planning/debt-consolidation/credit-card-debt-statistics/
·
Staying
Out of Debt. (2018, Sept 19). https://www.money-zine.com/financial-planning/debt-consolidation/staying-out-of-debt/
·
Brown, Mike. (2018, September 19). The Physical
and Social Impact of Credit Card Debt https://lendedu.com/blog/impacts-of-credit-card-debt/
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