Using Credit Wisely?
It seems that nowadays, most Americans have at least one or more credit cards. Some can use them responsibly, while others can’t seem to keep themselves out of debt. Charging something seems like a way to get free things for some people, since you’re not forced to pay for them right away. Most people don’t look into the future and see that flat screen television tripling in price by the time they get around to paying for it.
Personal bankruptcies are predicted to hit an ultimate high this year at 1.6 million. This is proof that people are doing something wrong economically, and I’m willing to bet the number of people suffering from bankruptcies was significantly lower before credit cards became prevalent. Credit card companies don’t seem to even care they’re signing kids up for their service fully knowing that kids are the ones who charge things they can’t pay for, and then they end up developing horrendous credit in a very short period of time. Only 40% of people with credit cards pay off their balance on a monthly basis. The others allow their amounts to grow as time passes.
The Federal Reserve reported that on average, households in America currently owe approximately $6,200 in credit card debt. The Federal Reserve also reported that this number continues to grow, and will do so in the future. People argue that this credit
card debt directly affects our economy, while others argue that a person’s personal debt has no affect on the entire country’s economic status.
It seems that a lot of times, credit cards pose as a last financial resort for people. For people who get laid off from their jobs, and all of a sudden are faced with their car insurance bill that they just don’t have the money to pay for, their credit card is an easy fix to the problem. Not too long after though, they might find they need to use a credit card to cover their electric bill or buy a new refrigerator. Before they know it they’ve accumulated an enormous amount of debt; a debt that is almost impossible to pay off a lot of times.
Five billion credit cards offers were sent out this past year, and it seems that not a lot of thought was put into whom these offers were being sent out to. It didn’t matter that these people were previously denied for credit cards at one point, and it didn’t matter if they weren’t people who were responsible enough to use a credit card responsibly.
Experts on the economy are saying that they don’t see this situation getting better at all. James Chessen, chief economist of the American Bankers Association says: “People use credit cards to cover the gap when they are out of work, and the longer they are unemployed the harder it becomes to manage until they miss a payment or two. I don’t really see those rates going down very quickly even if we begin to see better jobs number because it takes some time for those people to begin to pay down their debt.”
Credit cards also play a big part in the role of a small business owner. Starting a business is a hard enough thing to do these days, and when business slows down and there are a lot of bills to pay, owners are forced to turn to their credit cards. Bills are a lot larger when you’re running a business, and before long these business owners have accumulated so much personal debt, they are declaring bankruptcy sooner than they thought. Some experts even say that they believe most of the economy’s debt is because of small business owners.
Minneapolis Bankruptcy Lawyer Ian T. Ball explains the problem in this way:
‘You don’t get the perspective of an experienced lender. You can lose sight of your business plan while low monthly payments make it seem all is well.”
In conclusion, I feel the current issues going on in the United States regarding credit is a serious problem and I think something needs to be done about it. We have a lot of problems in America right now, but not only is credit causing people to dig themselves into a hole of debt, but now issues are surfacing that deal with credit card theft, identity theft, etc. So many problems are developing because of credit cards, and it almost seems unnecessary at this point in time.
I hope to see these issues with credit improve someday soon, but I think it’s almost impossible since credit cards are so common now a days. There are people who can use these credit cards responsibly, but there are others who don’t care to worry about their credit future. This is what causes problems, and I’m curious to see if anything will be done in the future to attempt to prevent these problems.
