Higher Incomes Hits By Credit Card Debt
July 28, 2008 · Print This Article
The economy’s been suffering, and in the wake of the credit crisis that began last year, more and more people are in debt, for greater and greater amounts of money. Experian, one of the three big US credit bureaus, reports that the average credit card user owes $6,900 specifically in credit card debt. This average reflects the fact that although many households are still free of debt, a given proportion of the population is in debt by more than $5,000 or even $10,000.
The $6,900 figure represents a rise of 21% since last year in the credit card debt of the average consumer. The number of credit card accounts showing late or never-submitted minimum payments has also risen, averaging out to more than one past-due account per credit card user.
More importantly, the latest reports show that people with higher incomes are those hit hardest by the latest spate of debts. Will Chen, a lawyer, reports his credit card debt spiraling to over $100,000 after he started his six-figure-salary job. Greg McBride, an expert with Bankrate.com, speculates that high earners are being most pressured to spend more than those with smaller personal incomes.
“It’s not a function of household income, it’s a function of household spending,” says McBride. Young people who land high-paying jobs out of college will buy houses, cars, jewelry, and expensive electronics equipment–before focusing on getting rid of their student debt. Will Chen explained, “when you start working and you’re in an environment where everyone is living the high life, you get caught up in that spending… in a way, it’s actually harder for people with good-paying jobs to live frugally.”
This proved true for Chen, who actually started being better able to take care of his debt once he took on a more modest employment.
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