Eye catching headline: “Is America Charging Too Much on its Credit Card”. I’ve managed credit policy, collections, and acquisition areas for major banks and there are some recent themes that indicate a brewing credit management storm.
If you continue to run a balance on your credit card every month, eventually your overspending will catch up with you. Collective interest charges will send you into a debt spiral – where you can’t even pay off the accrued interest, much less the debt itself. You simply can’t continue to spend more than you save every month.
You may respond, “Why not? America does it all the time!”
You’d be right – America has been in deficit spending for most of our lifetimes. Since World War II, when the deficit shot up to 29% of America’s Gross Domestic Product (GDP), there have been only seven years where the government ran a surplus – and four of those years were in relatively recent times (1998-2001).
We Each Owe about $170,000
The current national debt – the summary of all of our deficits plus the accrued interest – is over $20.6 trillion dollars. That’s a bit over $170,000 for every U.S. taxpayer. Ready to pay your share?
The real trouble begins if America is ever in a position where creditors believe that we may not fully pay off our debts as a nation, or that high interest rates are required to cover our risk.
As for our family budget, we certainly use credit cards and rarely carry cash. But we rarely roll over balances. I sleep better when I don’t pay 18% interest!
Overview by Brian Riley, Director, Credit Advisory Service at Mercator Advisory Group
Read the quoted story here