Our San Diego-area readers have probably noticed that our previous posts for the most part have revolved around debt and how to deal with it. Mortgage debt, student loan debt and credit card debt: they can truly seem crushing, especially when one household is dealing with all of them. San Diego residents may be particularly interested in a recent Forbes article that takes the long view of the problem of credit card debt.
The report points out that in the past two years the average amount of credit card debt carried by American households dropped some $2,000. That fact from the outset is a good thing. But the article in Forbes points out some risks that readers throughout California will want to consider.
The average drop in credit card debt was in large part the result of credit card companies writing off the most seriously delinquent of accounts, thereby reducing the actual amount outstanding overall.
Additionally, as the country's economic malaise continued in recent years, credit card companies began to pull back on who they offered credit to, and how often. The liberality with which these companies sold questionable financial products was reined in. Some analysts predict, however, that as the employment rate improves, credit card companies will return to their old lending habits, once again encouraging unsuspecting consumers to enter into a crushing debt situation.
Dealing with credit card debt can be one of the most nerve-wracking parts of personal financial management. Credit card debt is third among the types of debt that weigh heaviest on American households. Mortgage debt and student loan debt take the first and second slots, respectively. But Californians who are confronting a large credit card debt should be aware that options are available, and a financial fresh start is not just a dream; it could be a reality.
Source: Forbes, "Bad News: Credit Card Debt is Down," Tim Chen, May 30, 2012