Credit Card Debt: Most Americans Don't Pay Bill In Full

Most Americans are card-carrying members of a club in which the card is actually the problem. 1.02 trillion Americans owed in 2008 before the financial crisis occurred. 4,717 of credit card debt. 18,155 cost for a very small loan. American credit card borrowing may not be at its peak, but it’s still extremely high, and even more concerning is that the numbers don’t seem to change very much over time.

When the economy is hurting, borrowing is high. When the economy is booming, borrowing is also high. And no matter the situation, Americans seem to have credit card debt. The Boston Fed recently released a study examining American credit card debt, and shed some light onto American credit card borrowing and why it’s so pervasive. The biggest reason for such high debt, the study found, was high availability of credit.

When someone is offering you credit, it’s hard to say no. “Available credit appears to be the driving factor of debt in both the short and long term,” the study says. Only 35% of credit card users don’t carry a balance-they pay off their bill every month, like you’re supposed to. They use credit cards for convenience, and perhaps to generate bonus points and rewards, not because they need to borrow.

Part of this credit card addiction can be attributed to how easy is to rack up multiple credit cards, and each comes with the opportunity to build up more debt. 600 worth of miles or hundreds of dollars in cash back as incentives to apply and to spend. This addiction typically starts in one’s 20s, when people aren’t necessarily earning very much.

The availability of funds through credit essentially amounts to extra wealth, and the Fed says this reduces the need to save. Or, in other words, it allows people to spend more. Though it makes sense to borrow against the prospect of a larger salary when a person has an entry-level job, these bad habits die hard and can affect one’s personal finances in middle age and even old age.

You must understand to achieve the type of savings I stated above this process should take no more than three years, preferably two or less. And the bottom line is some people simply cannot get it done in that time frame and should realistically be looking into bankruptcy. What these unscrupulous consumer debt relief companies will do is put you on a program for 4 or more years and basically accepts whatever payment you can afford.

Knowing full well you are not going to be saving much of anything and will more than likely fail off the program, all they care about is getting the fees and that is it. An honest company will diligently review your budget with you and make sure this is something that you can manage, as well as fully explain to you both the benefits and drawbacks of doing this.

And let you make the conscience decision as to whether this is the best consumer debt relief method for your situation. Another very good way to evaluate a company is to make sure they are registered with the BBB (Better Business Bureau) and that they are in good standings with very few complaints. And if there are complaints make sure they were resolved to the clients liking.

If you have a single credit card that you use, you will probably find it easy to manage. You can keep track of your spending and make a payment towards it every month. If however, you have spent money on several cards you may be finding it much more difficult to control.

Juggling these debts can be a tricky and sometimes dangerous game. One of the possible solutions for this problem is to take out credit card debt consolidation loans. This kind of debt often becomes a problem when the borrower can only afford to pay back the minimum monthly repayments. While doing this will keep your credit history looking healthy it will not actually decrease the balance.