Consumer Debt in America
Some debt management studies or surveys reveal that the average American carries 4-5 credit cards. Others say that it’s more than that, that the average American carries up to 9 or more cards; and Cardweb.com went more specific with the number and type of cards. According to them, on average, an American consumer carries 2.7 bank credit cards, 3.8 retail credit cards and 1.1 debit cards, which totals to 7.6 cards per cardholder. In a way, it’s pretty close to the other studies, and though no one can actually come up with the exact figure, we at least, get a picture of just how much Americans rely on their cards or credit in general.
A clearer picture, based on those studies, shows:
-that about 43% of American households spend more than they earn each year.
-that each household holds an average of $8,000 in credit card debt.
-the personal bankruptcy filing has doubled in the past decade.
-the number of consumers enrolling in credit card debt relief programs has increased.
And although those figures are only considered as a trend and not a conclusion, it certainly says a lot about the United States economy in the 21st century. Credit card debts are considered “revolving debts” and in the last 5 years, a 31% increase was seen, according to the Federal Reserve. Some credit this boom with an influx of capital from countries with budget surpluses, specifically China, while others point to the advent of the internet or an increasingly materialistic American consumer.
It would be amiss to leave out perhaps the main culprit of this increased reliance on credit – the credit card companies themselves. They are not only open to extending credit to those formerly they’d considered as “high risks” but they are actually quite aggressive in pursuing them. “High risks” are those consumers with bad or poor credit scores, who some credit card companies, notably HSBC and Capital One, target because they can charge higher interest.
What is a poor credit score and how to improve it
This is by no means the standard answer at it depends on the lender or creditor, what they think is a bad credit score, but generally, a score below 620 is consider poor. A score above 720 is considered excellent and the vast majority of consumers have scores between 660 and 720. The mean score is 680.
Your credit score is made up of five main parts: your payment history (35%), your amounts owed (30%), the length of your credit history (15%), new credit (10%), and the types of credit used (10%). This being the case, the fastest way to improve poor credit is to make on time payments and keep your balances low.
James Randolph is a guest blogger and debt professional for www.hamiltondebtrelief.com.
