Why Credit Card Debt Levels Are Rising

| December 12, 2012
Credit Card Debt Levels Are Rising

Credit Card Debt Levels Are Rising

With Credit cards coming up with advanced options, the demand for cards followed by extensive usage is on the rise. Consumers today use their credit cards quite extensively to satisfy their own needs. Increased spending will however have a negative effect in the long run.

Banks and finance lenders have been constantly increasing the level of credit cards issued. They make it easy for the consumers to make debts as it is the best way through which they can make money. This is imposed upon the consumers in the form of fees and interest rates. Interest rate is compounded with respect to each purchase made which would again differ according to the items chosen at the time of purchase. Unexpected expenses like car repairs using credit cards can be an added advantage to the lenders striving to make money.

Certain credit card lenders offer credit points on every payment made within the given time constraint. With the daily needs of a common man rapidly increasing, one may tend to use credit card as a medium to make purchases. If the value of purchase is high, one may find it difficult to pay it before time or not pay it at all. This is where the lenders take due advantage. They charge interest on a daily basis until it is totally cleared. Being able to derive more than spent from the consumers, credit card dealers have now given them access to withdraw cash using a credit card. The interest rates charged on money transactions through credit cards is much higher than that charged on purchases made.

Most banks charge fees for usage and eventually charge interest from the moment the withdrawal is made by the consumer.

One of the other factors really responsible for rising credit debt is the declining real estate market. The competition in the field of real estate is on the rise. With its overall value declining and interest rates speculated by financial organizations rising, the consumers are forced to opt for other alternatives.

Factors for the increase in the credit-card debt could be as a result of the rising unemployment rate. This is especially true in cases where they use their credit cards even for basic needs.

Meanwhile financial experts report consumer credit card debt to be hiking in accordance to the slower economic growth and higher gas prices. This is because the consumers usually don’t directly absorb the rising transportation costs.

The credit card companies spoil the customers with a host of options.  Savvy customers often fall prey to this bait in the hopes of earning points and getting freebies.  To add to this credit cards are the preferred mode of payment with its higher security technology. People don’t usually bother about the interest that accrues later on when they make big purchases using their credit card.  What the companies’ project is the lower interest rate as compared to taking a personal loan for the same purchase.  Hence gullible customers end up buying stuff that they can’t afford to pay up in time.  This invariably causes steep increases in credit card debt.  Although credit interest overdue is an issue, it is seen that credit card demand is still on the rise.

Author Bio: Tina Harris helps people struggling from credit card debt on her website CreditCardDebt.org where she is an associate.

Why Credit Card Debt Levels Are Rising


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