In a shifting preference of consumers over the last five decades, Americans have accepted credit card debt as part and parcel of life. Regrettably, the credit card has now become a tool to subsidize the American lifestyle. Herein, this has led many people to live beyond their means. Societal stigmas attached to having credit debt have disappeared, thus a major component of restricting undesirable behavior in society, that of possessing bad credit card debt no longer matters.
Herein, people are becoming saddled with debt, struggling to pay bills, unable to eliminate credit card debt and end the viscous cycle of debt. Unsurprisingly, debt management, credit consolidation, and credit counseling have mushroomed across the landscape.
Debt counseling services offer people help in reducing and eliminating their credit debts and other bad debts. But consumers should be aware that many of these debt services companies have been found to be fraudulent and exploitative in nature.
However, the current economic conditions have further burdened the personal finances of Americans. In order to survive and possess the necessities of survival in today’s world, more charges are being placed upon credit card accounts as discretionary incomes have virtually evaporated.
The soaring food and gas costs are leaving people with hardly, if any discretionary income, thus the increase in the use of credit cards. Credit card companies are ecstatic at the increase in charge activity, as it promotes their profits.
Discretionary income is the pivot of personal finance without which debt management is effervescent. According to the Fed, credit debt rose by 6.7% in the first quarter of 2008 to $957.2 billion.
It is not surprising that credit card debt has increased irrespective of the tightening of credit in the economy. Regrettably, for many consumers, accumulating bad credit debt is now an unavoidable necessity, not a choice.
During the housing boom, consumers simply tapped into the home equity to finance their standard of living. Recently, banks and other lenders have mainly suspended equity lines of credit, accessing a home equity line is no longer a possible alternative for generating cash flow.
Alas, faced with soaring commodity prices and diminishing discretionary incomes, Americans must charge to survive.