Economists and financial experts around the country agree: the next big issue that America will face concerning its economy is credit card debt. Trailing right behind the subprime mortgage meltdown, credit card defaults will be the next enormous hit to consumers and the financial institutions of the US.
Several reports have shown that the collective American population owes more than $1 trillion on their credit cards. This figure represents the total of balances that carry forward every month upon which interest is added. Also, almost half of all those accounts are making just the minimum required monthly payments.
According to the several credit businesses, the average interest rate on regular credit cards is 13.42%. The more debt a person has, however, the greater the chances are that the person’s interest rate can be as high as 20% or more. When rates reach that level, and people have resigned themselves to making only minimal payments, then in reality they’re actually putting themselves in further debt rather than paying debt off.
It used to be that when faced with grave debt, people would admit defeat and find themselves facing bankruptcy as their only solution. This is no longer the case, as the government has changed the laws regarding bankruptcy which leaves the option something that no longer eliminates credit card debt. Instead, those who owe money face the burden of having to pay off what they’ve accumulated in debt, making it a tricky situation when it comes to handling finances.
There is hope, though, in that the federal government has stepped up and formulated an economy stimulus plan that is promised to be delivered sometime during the second quarter of 2008. The plan involves packages worth around 500 dollars each that are expected to be sent to over 13 million individuals and families that have filed taxes last year. Economists believe that although this might help those who have large debts, it can only stave off what’s to come if these same people who are receiving the aid don’t address their debts first.
Recent additions:
- AMT Tax Might be Abolished
- Record High Foreclosures
- Debt Consolidation May Be The Wrong Move
- Majority of Americans Pessimistic in Regards to Stimulus Package
- Sterling Savings Bank Announces New Electronic Payment System
- Fed Pessimistic For This Year
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