Credit Card Debt–Cheerful Figures Mask Real Misery
The Good Credit Card News
It’s Independence Day so let’s celebrate the fact that today Americans are less dependent on credit card debt than they have been for a very long time. A quick trip to the Federal Reserve’s website reveals the latest figures. In 2008, revolving credit balances (which are mostly made up of credit card debt) averaged $958.1 billion. In April 2010, that figure was down to $838 billion.
Wow. That’s a reduction of more that $120 billion. No wonder virtually all the big credit card companies are reporting falling levels of both delinquencies (overdue accounts) and charge offs (debt written off because it’s uncollectable).
If you’re feeling in a fragile frame of mind, and simply aren’t up to dealing with bad news, then stop reading now. Because reality is about to intrude.
The Bad Credit Card News
The bad credit card news is that all that good credit card news was plain wrong. Yes, balances are down by $120 billion, but most of that is likely to be because card issuers have written off huge amounts of debt. And that money has fallen off the Fed’s revolving credit figures and into the laps of collection agencies.
Worse, as the Wall Street Journal pointed out Saturday, the reason credit card companies are reporting better delinquency and charge-off rates is because: “Some people have been unemployed so long they have simply been washed out of the credit system and no longer have any effect on the numbers.”
Credit Card Users Face Harsh Penalties
Things can be pretty tough too for those who remain credit card users. MarketWatch revealed last week the results of a survey that suggests too many card issuers retain what it calls a “gotcha” attitude to penalty interest rates.
As if credit card rates aren’t high enough already, many companies impose substantial hikes on those who are even a little late in making a payment. And the survey shows that some issuers use language to explain their penalty programs that is at best unclear, and at worse could be seen as deliberately obfuscating.
Chasing Good Credit Card Deals
When it comes to explaining penalty credit card rates, none of the major issuers scored perfectly in the survey, but one that did better than most was Chase. So, if you prefer to deal with a company that strives for clarity in its dealings you could do worse than explore some of its products.
Disclaimer:The information in this article is believed to be accurate as of the date it was written. Please keep in mind that credit card offers change frequently. Therefore, we cannot guarantee the accuracy of the information in this article. Reasonable efforts are made to maintain accurate information. See the online credit card application for full terms and conditions on offers and rewards. Please verify all terms and conditions of any credit card prior to applying.
This content is not provided by any company mentioned in this article. Any opinions, analyses, reviews or recommendations expressed here are those of the author’s alone, and have not been reviewed, approved or otherwise endorsed by any such company. CardRatings.com does not review every company or every offer available on the market.
Published (Modified )