…… & NOW CREDIT CARD CRISIS IN AMERICA
Emergence of global financial meltdown was the effect of failure of the sub-prime mortgage and financial securities market. (Sub-prime borrowers were those that had less healthy loan repayment abilities.) The US is in deep financial trouble. The US credit card default rate have reached an all time high of 13% in March-10, and the total outstanding credit card debts per household which holds credit card debt, reached a staggering $16000 in the same month. The survey conducted by Fitch Ratings reveals that 98% of the total revolving debts in the US are made up of credit cards. Another astonishing fact was that 92 million of all US households hold one or more credit cards. Since 1970s fall in real wages of Americans have increased the usage of credit cards in the country. Americans mostly use the credit cards on housing, food, education, and health care. But with unemployment rates still hovering around 10% mark, default rates have increased over the past two years. Thereby catalyzing concerns that a chain reaction could pull the entire system down.
Credit card debt
• Average credit card debt per household with credit card debt: $15,788
• 76 percent of undergraduates have credit cards, and the average undergrad has $2,200 in credit card. Additionally, they will amass almost $20,000 in student debt. (Source: Nellie Mae, “Undergraduate Students and Credit Cards in 2004: An Analysis of Usage Rates and Trends”)
• Total U.S. consumer revolving debt fell to $866 billion at the end of 2009, down from $958 billion at the end of 2008. About 98 percent of that debt was credit card debt. (Source: Federal Reserve’s G.19 report, March 2010)
• The mean, or average, unpaid credit card balance last month was $3,389. The median is $90. (Source: “The Survey of Consumer Payment Choice,” Federal Reserve Bank of Boston, January 2010)
• About 45 percent of consumers said their unpaid credit card balance had gotten “lower” or “much lower” in the past 12 months. Only 26 percent said it had gotten “higher” or “much higher.”