Americans Still Under The Burden Of Credit Card Debt

March 13, 2012 6:50 am 0 comments

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Almost all individuals in the U.S. are infected with the habit of making the indiscreet use of credit card that results in incurring them overwhelming credit card debt. According to the latest statistics of the U.S. Census Bureau, 2010, U.S. citizens have over $886 billion in credit card debt and the figure is expected to rise to $1.177 trillion. Thus, people in the U.S. are under knee-deep credit card debt and looking for a way to achieve debt relief.

Around millions of people spend beyond their means and get racked up with outstanding credit card debt. Due to this never ending burden of credit card debt, consumers ran into trouble when global financial markets rose and the housing market went down.

The latest research by credit card comparison website CardHub indicates that consumers are charging more and more on their credit cards. On the recent economic surface, the credit card debt in the U.S. seems to be never ending. In this context, it is to say “old habit die hard”.

According to the latest research in 2011, Americans are accrued by over $48 billion in new credit card debt, 424 percent more than what they incurred in 2010 and 577 percent more than what they incurred in 2009. Although the total outstanding balance on credit card debt rose by around $4 billion but the number is largely counteract by the vastness of consumer defaults, that is, $44.2 billion.

Over the past two years, with the recent exception of a single quarter, U.S. consumer debt has been consistently worsening. The report points out that the current trend of consumers paying down debt does not match with the two year old data. In first quarter, people paying down the debt have become less significant and therefore, the amount of debt has been added to each succeeding quarter.

However, do not worry with these facts and figures. The U.S. has not yet headed into another debt-fueled downward spiral. Many Americans have had to turn to credit cards to meet their daily expenses and finances, while others had several different reasons to rely on credit cards.

According to Greg McBride, senior financial analyst at, there is a lot of competition on rewards credit cards to attract big spending consumers. By big spending consumers we mean people who make payments in full every month, and make a lot of purchase with credit cards. But this does not mean that these people carry bigger balances or incur more debt.

Some experts comment that consumer credit card debt has been dropping over the past few years; the bulk of the decline caused because of charge-offs or card issuers writing off debt that had no hope to recoup. Card issuers were very aggressive in paying off the debt in 2009 and 2010. McBride says that this is the reason why people over the last few years have been actively seeking out a way to grow their business.

While many credit card companies put efforts to expand their business and profit, consumers should be aware of the pitfalls involved credit card debt. Odysseas Papadimitriou, founder and CEO of cardHub comments that there should be a permanent solution to consumer spending behavior.

People often create budget to live within their limits and in doing so they must remember, if the spending is tied to the housing market prior to the Great Recession, then they cannot come back to the pre-recession levels, no matter how much the economy recovers.

Furthermore, many credit card companies forgive the balances on debt in the event when consumers are unable to pay off the debt, but that depends on where the consumers live.

Written by Kavin Matthews

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