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The American Average Credit Card Debt Warning Signs

Mar 13, 2008
Many people have far too much reliance of credit these days. They seem to have forgotten the concept that you can only have something if you can afford to pay for it. The on demand, instant gratification society that we live in might explain why this idea has taken hold but it does not really excuse it.

Of course, using credit is not a bad idea but using it wisely is often the problem. Buying an asset with cheap credit makes a lot of sense, especially if you know that the asset will appreciate with time. However the average credit card holder does not use credit to buy an asset. They use it for disposable items and items that depreciate over time. This is a fundamental problem that is partly the fault of the individual and a feature of a credit card that is pushed by marketing.

This has resulted in the American average credit card debt skyrocketing over the last few years. This not only influences the individuals that run up this debt but also the wider society and economy as a whole. This article will cover what has to happen to lower the average credit card debt in the United States (and many other Western Countries.)

The importance of the average American credit card debt figures can't be overstated. It is an indication of our reliance on credit. It may not be relevant to someone with no debt but it does influence the banks and the economy. It is a statistic that helps to set policy in banks, credit card companies and governments.

Thus if the average debt is rising and continues to rise it is an indication that people should start to take a dose of reality. Give up the easy credit and start working on lowering any debts is the message. Get back to the quaint idea of living within your means and only getting something if you can afford it.

It also suggests that credit and financial institutions will be tightening their purse strings too. Increased debt means that they will factor in increased defaults. And the costs of these defaults will no doubt be passed on as increased bank charges or service fees. This is not beneficial for the individual or wider community.

Reel in your spending.

Your aim is to reduce debt and get your finances in a better state but this will never occur if outgoings exceed ingoings. In other words if you spend more than you earn. This is often the case when you have large debts to service each month.

If you have existing debts like credit card debts then set some guidelines on using credit. Limit the number of credit cards you have. Start this off by consolidating all debt on one credit card. Select a card that has an interest free introductory bonus period or on balance transfers. This can help you to start reducing your debt without interest adding to the debt.

It might not be sexy but try to live within your means. This means covering the essentials and any debts that you have to service. If your debts are large then this might be a large portion of your monthly income. Try to cover these debts and cut out anything that is not necessary to live. If this means cutting down on dvd rentals or going out every other night then so be it.

This may take a while. It could take 2 years or more but once you have cleared your debt you will be in a far healthier position. Without a debt hanging over your head you will have more control over your life. When the American average credit card debt starts to reduce this will indicate that the economy is on a sounder footing which will benefit everyone.
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