Credit cards are becoming more and more well loved, this makes a huge problem for many people. The credit card debt owed by an average American citizen is growing every day. This has serious repercussions on nearly every market, credit card debt has also affected car loans, school loans, bankruptcy and mortgage rates.
Many people in the US are starting to realize that they cannot cope with their credit card debt and so are turning to debt consolidation loans which are designed to make their repayments much more manageable. You may not believe that the average credit card debt is really that terrible, but I assure you it is! There are some facts below to back this up.
The facts about credit card borrowing in the US
The average credit card has a balance of $1000, now let’s assume that the cardholder only pays the minimum fee every month, so if they pay the 2% minimum it would take them 22 years to pay off the original debt, and that’s not including the interest, you would also owe an additional $2300 in interest charges!
The average household in America owes $8500 on credit cards, but this is starting to rise. Many people have more than one credit card, the average credit card debt has tripled since 1990 which is a very shocking statistic. People simply don’t realize that this money has to be paid back!
Interest is the killer, the average American person spends $1200 a year just to meet the interest repayments, this is a very high interest rate for a comparatively small loan. This is often more than mortgage repayments, or other loan repayments. If you have ever worried about getting enough money to make your mortgage payment then you should stop and reckon whether a credit card is right for you.
Credit cards have a very high interest rate, the average interest rate is 18.9% but this is nearly always on the rise. Some cards offer much worse rates for people with a poor credit history.
Americans are very proud people, and money is something very private. Half of all Americans would not talk about their credit card debt to a friend or family member. Nearly a quarter of American credit card holders have maxed out their cards, 13% of these people were also late with their monthly payments which costs them more money in fines.
Credit card are quickly becoming a very serious problem which is affecting many different industries, it doesn’t just affect the banking industry but also impacts the real estate and car industry. Credit card debt can fuel a very serious economic problem which will affect the whole country. It can be hard to get yourself out of credit card debt, but it is possible if you are willing to place in the hard work.