Americans going deeper in debt

Sacramento Bee ^ | 3/10/03 | Loretta Kalb

[hoosierskypilot]

Almost half of U.S. consumers are making only minimum payments -- or no payments at all -- on their credit cards, a new credit survey shows.

And a similarly large volume -- some 44 percent -- are continuing to take on debt because they don't have enough cash to pay ongoing expenses.

[hoosierskypilot]

Add to that the inflationary prices people are currently paying for houses, and you have a balloon that's gonna maybe explode like a nuclear bomb.

[El Sordo]

We need a tax increase to help these poor people!

[NautiNurse]

a large portion of the increase in debt was involuntary -- that 44 percent are going further into debt knowing in advance they won't be able to pay when the bills come in

Have read this sentence twice, and still don't understand it.

[Jim Noble]

Debt is money-just ask the Fed.

If it's OK for the Fed, why isn't it OK for Ma and Pa?

[hoosierskypilot]

Have read this sentence twice, and still don't understand it.

Some credit card companies charge upwards of 20% interest. At higher levels, people who pay only a minimum payment aren't even going to offset the interest charge. They go deeper into debt without even using the credit card.

[allodialman]

MOST CARD HOLDERS PAY 26%

[NautiNurse]

If you know in advance that you won't be able to pay the bills when they arrive, then how is that involuntary? With all respect, this seems more like willful disregard. Credit card apps require signature agreeing to the terms.

[hoosierskypilot]

Well, yes, in that sense, of course, you're correct.

Interesting sidebar: Much of this accumulated debt they speak of relates to younger people. Credit card companies have long targeted college kids. The companies know the kids will not exercise self-control and max out quickly. The companies also know many of these kids will ruin their credit.

Why do the companies target these kids, then? Because Visa, et al, also knows that enough parents of the kids will foot the bill so as to make the marketing strategy successful. So what that it injures kids who don't know what they're getting into. It's only business. (In the minds of the companies, that it.)

[ThinkDifferent]

Of course, you can pay 0% if you take the radical course of not spending money you don't have. I know some people really do get a run of bad luck and have to go into debt, but I refuse to belive that applies to anywhere near the 44% mentioned in the article.

[Willie Green]

"Think what you do when you run into debt;
you give another power over your liberty."

-- Benjamin Franklin (1706 - 1790)

"I am one of those who do not believe that a national debt is a national blessing, but rather a curse to a republic; inasmuch as it is calculated to raise around the administration a moneyed aristocracy dangerous to the liberties of the country."

-- President Andrew Jackson - (1824)

[NautiNurse]

Credit card companies have long targeted college kids

With the blessings of the colleges, who share in the financial windfall with the credit card companies. The credit card companies set up their tables in the student unions offering credit cards with the university logo on it. What a racket.

[hoosierskypilot]

Yes, my alma mater has sent me numerous credit card offers w/the school logo. I was very disillusioned since it was, formerly, a distinguished school. Turns out it's all about money, after all.

[Sam's Army]

"In the Sacramento area we have a high lifestyle, and we don't adjust our lifestyle, even when one spouse loses a job or income goes down," she said"

By golly we gotta keep up with the Jones' don't we?

[Cable225]

Have read this sentence twice, and still don't understand it.

"I simply cannot afford to increase the balance on my Visa card. Therefore, I AM going to purchase this big-screen TV because I simply must have it."

Sounds pretty voluntary to me.

[valkyrieanne]

"Involuntary debt" is just another word for *theft.*

[Tauzero]

" By golly we gotta keep up with the Jones' don't we?"

There's even a technical term for it now: normative spending.

[Sam's Army]

"normative spending"

Unreal.

I really think high schools would do well to have less emphasis on geometry and algebra and more on budgeting/consumer math.

But then again, ya can't teach common sense can ya?

[HighRoadToChina]

BUMP

[BlackJack]

Long term unemployment is at record levels and rising. We could
be in for another depression.

[Centurion2000]

a large portion of the increase in debt was involuntary -- that 44 percent are going further into debt knowing in advance they won't be able to pay when the bills come in

Simple, they realize that by making only minimum payments that the interest accrued is more than the minimum payment is worth ?