Problem With Credit And The New Economy |
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If you are a student reeling under the jaws of problem credit, you may find that a lot of credit card companies will give you fabulous offers. The number of people suffering from problem credit is increasing, and credit card companies are on the lookout.
On many college campuses credit card companies promote themselves and proclaim heavy offers to the students. The credit card companies are very much aware of the needs and requirements of today's students. They know if they are able to catch the attention of the students, they can make huge profits from them. But most of the students never realize these things. Many students go on a spending spree when there is money in their accounts and as a result stagger under problem credit. According to a recent survey, 70% of students at four-year colleges with credit cards have over $2,000 of debt that they carry over from month to month. 14% of all American college students have credit card balances exceeding $7,000. Most students who have problem credit pay upward of 17% interest on this debt. So, can you imagine the impact of credit cards upon the students? Students are now more in debt than they had been a decade back. And of course, the real factor is the credit cards. Credit cards not only let one make impulsive purchases but also endow one with problem credit with failed payments. The interest rates on credit cards are very high and students' income levels are notoriously low. Historically speaking, students were more likely to be avoided by creditors. But what's the scene today? Students are the main targets of the credit card companies. You probably know few people who have fewer than three or four credit cards. Most Americans carry several credit cards and use them for every purpose. The sad thing is that many never pay attention to repayments. And in such conditions, problem credit is inevitable. The high rates of credit card delinquency and bankruptcy have generated much discussion. Some blame credit card default rates on lenders, whose more lenient standards allowed consumers to borrow more than they could repay; others blame borrowers. Credit card delinquencies and personal bankruptcy rates increased during the mid-1990s, despite the strength of the U.S. economy. Even though per capita income rose during that period, household borrowing grew even faster. The rise in revolving debt--mainly credit card loans--was especially noticeable, resulting in an increase in the share of revolving debt in total consumer debt. So, the same was the case with problem with credit. The 1990s were described as a new era for the American economy. 68% of Americans have a credit card and much of the New Economy's heralded low-inflation growth has been fueled by debt, much of it credit card debt. Ever wonder how the economy has been able to grow prodigiously as income inequality has skyrocketed and wages have stagnated? There are two answers. The first is that with a booming economy people feel optimistic about their finances, even if they don't have problem credit. The second, and more disturbing answer is consumer spending based on debt, often credit card debt. Forget about whatever the economy says. Life is very difficult if you are having problem with credit. So, be careful and avoid getting into the credit card debt. |
