As of January 2015, Americans are $882.9 billion in the hole, a 3.3% increase from the previous year.
Yet people are more reluctant to talk about credit card debt than ever, preferring normally taboo topics like politics, salary, love, and religion over credit card debt, according to a poll by CreditCard.com. The average credit card holder has 3.5 credit cards, those little pieces of plastic that have wracked the average credit card debt per household up to $15,799. (This number does not consider households that do not use credit cards. In other words, having credit cards has given the average American household the opportunity to have almost $16K in debt!) Who would want to ruin a good dinner party by talking about that?
Surprisingly, those numbers are down from 2008. That was the year the recession hit, and it saw an average of 5.5 credit cards in the hands of credit card-holding consumers as well as a higher sum of credit card debt per household.
Credit card companies refer to people who pay off their credit card balances each month as “transactors.” They generally only charge the amount that they have in savings, therefore avoiding interest charges on amounts they cannot cover. People who do not pay their whole balance each month are known as “revolvers,” who make up 7 out of 10 of the credit card holding population. They pay interest so they can let their credit card balance roll over to the following month. Less American consumers are revolvers now than in the recession era, but the average amount of overall credit card debt is higher. Americans born between 1980 and 1984 have the highest amount of credit card debt in the country, averaging about $5,000 more than their parents and $8,000 more than their grandparents.
On the bright side, interest rates on all types of loans have fallen since 2010, according to a study by the United States Federal Reserve. This, in conjunction with the Credit CARD Act of 2009, or the Credit Card Accountability Responsibility and Disclosure Act of 2009, may be helping young Americans stay out of their sometimes staggering debt. The Credit CARD Act protects consumers from spiraling into overwhelming debt as a result of misunderstandings, oversights, and fine print. It does not eliminate fine print or the responsibility to read it, but it does impose reasonable restrictions on credit card lenders regarding interest rate changes and consumer communications.
The Credit CARD Act of 2009 also protects vulnerable, uninformed people under the age of 21 from signing themselves up for ridiculous amounts of credit card debt. It requires consumers under the age of 21 to either show proof of income or obtain a signature from an adult co-signer who is then legally responsible for any debt the youngster accrues. Part of the logic behind this clause is that an older co-signer who is supposedly well-versed in the realities of credit card use will then have a vested interest in educating a new credit card user.
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