Careful Financial Planning is an Absolute Necessity
Thursday, July 10th, 2008 Subscribe To Our Feed
Credit debt in America is growing by leaps and bounds to unprecedented levels. It was not long ago that very few were even blessed enough to have access to a credit card. Now, not only does nearly everyone who wants one have one, but many of them are in greater debt than I ever would’ve believed possible. Many curse themselves now for falling prey to the allure of what credit can bring, without fully comprehending the reality of it all. Now a veritable credit crisis has swept the nation, which when coupled with the slowing economy has seriously affected key sectors like housing, which has seen a tremendous drop-off. To fully understand just how grim the credit situation is in America right now, let’s take a closer look at some of the numbers.
For starters, the average credit card carries a $1,000 line of credit. If this average debt were maxed out, and was paid back with just the minimum 2% monthly payments each month, it would take an average of 22 years and $2,300 in interest fees over that span to fully pay off the debt. As you can see, that’s a lot of household money that’s just going up in smoke, or rather into the credit companies’ coffers. When households get into situations where they can’t even make the minimum payments, things become drastically worse.
The average credit debt in America is now at $8,500 per household. As you can see on a simple $1,000 debt how much money is being thrown away, now imagine that figure multiplied by 8.5 times, and with greater fees from missed payments and increasing rates thrown in. Since 1990 the average household credit debt has tripled, and could very well do the same over the next 20 years.
The average American now pays more than $1,200 a year in interest payments alone, and this will only increase as debt grows higher and interest rates continue to increase. The average rate is now 18.9%, with some cards for those with poor credit having rates as high as 20-30%. For those with bad credit a consolidation loan for debt could be the best pathway to recovery.
As anyone who’s dealt with growing debt can tell you, it’s not a problem that will simply go away or get easier with time, it’s quite the opposite. This national credit crisis will only escalate in the years ahead, and there’s no telling what it will take to stop it. The credit companies growing a conscience perhaps and not handing out cards to every at-risk individual? Highly unlikely. The answer is one that for the foreseeable feature simply doesn’t exist.
About the Author: by Caden Flynn: Unpack for yourself why so many people are interested in debt consolidation loans bad credit. Join us http://www.debtjerk.com/debt-consolidation-loans.html.
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