Understanding Credit Card Debt
The definition of credit card debt is: The unpaid balance on a credit card. This is not the minimum amount due, but is the total balance due on a respective line of credit.
According to the public watchdog organization, US PIRG, 60% of Americans carry a balance on their credit cards and individuals and families now carry almost $10,000 in credit card debt.
Americans today have a total credit card debt of over $830 billion dollars and a total debt load capacity of over 2 trillion dollars. That means that if everyone maxed out every one of their credit cards right now, Americans would be $2 trillion dollars in credit card debt. That’s more debt than most country’s total gross domestic budgets. And this debt load is literally killing us. Maybe you know someone who’s in crushing debt, maybe it’s you?
This crushing debt is causing more than just financial headaches. It’s causing real headaches, too. Financial stress is one of today’s biggest health concerns. People don’t sleep well, they don’t concentrate well, and they eventually wind up getting sick from all the worry and stress, which costs the consumer and the health care system even more money, some of these costs are now being put on credit cards. Talk about a vicious circle…
The more you know and understand how the debt system works, how to use credit to your advantage, and how to stay out of a debt disaster, the better off you’ll be and the more money you’ll have for the truly important things in life.
The only failure is not to participate in your own life. Consider your current debt position as a great opportunity to learn more about you and how you want to live the rest of your life.
What “They” Don’t Want You to Know
The banks, credit card companies, and other financial institutions keep their secrets locked up tight, so tight that they deliberately obfuscate the truth from consumers and deliberately mislead consumers into making poor choices
when they choose credit cards.
They do this by:
1. Making the credit disclosure statement impossible to understand, even by highly-trained lawyers, let alone, uninformed consumers
2. They bombard the consumers with billions (5.4 billion last year) of “pre-approved” credit offers via the US Mail and even more via the internet
3. They tease one low rate “0%” and then in a few short months the rate soars to as much as 22%, or more
4. They have dozens of hidden fees and charges that are not properly disclosed in a way that makes sense
5. They are able to change your interest rate at any time for any reason, including no reason at all
6. They lobby congress to change the rules and the law to benefit themselves (they spent over $50 million to get the new Bankruptcy Reform Bill passed in 2005 alone)
7. They give credit cards to consumers (the poor, college students, and the already in debt) that are truly credit unworthy in hope that they will not be able to pay their monthly minimum payment to collect the extra fees
8. Some creditors (pay day loan companies for example) charge as much as 1095% effective interest without revealing how this happens to the consumer (beware payday advance businesses)
These secrets are the glue that binds the credit card companies and banks together. They get the unsuspecting consumer sucked in and then they change the rules without any warning. It’s like this… The credit industry is the only industry that can actually charge you more money for the products you buy than what you paid for the products originally through higher interest rates.
Beware and be forewarned. Credit itself is not bad, but it can get you into a lot of trouble if you are not prepared.
I am yours in success,
Randall
