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Debt Statistics
Pre-approved credit card offers
Ever wonder why you keep getting all those "Pre-approved"
credit card offers - even though you're in debt, thinking of personal bankruptcy or maybe
your credit rating is far from perfect? It has been the trend, as of late, for creditors
to offer their cards to all consumers, especially those with credit and debt problems in
the past. They hope that your past poor credit habits will force you to spend more money
with their card - and rack up plenty of interest and late charges making personal
bankruptcy look appealing. They'll earn money and you'll be back in financial turmoil.
Average family credit card debt
You might be wondering, "I owe my creditors thousands of
dollars - there can't be anyone worse off than me! I need to declare personal
bankruptcy!" Check out the following debt statistic and see how you are not alone.
Keep in mind that the dollar amount is an AVERAGE - that means there are people out there
who owe a lot more than our example: The average family in credit card debt carries a
balance of $4000 on several cards from month to month.
Personal bankruptcy
One indicator of debt in the U.S. is the number of personal
bankruptcies declared each year. While many more bankruptcies are declared than need to
be, this statistic shows how many people feel their debt burden is more than they can
handle and declare bankruptcy: In
the year ended June 30, 2004 there were
1,599,986
personal bankruptcy filings.
National consumer debt
In many ways, ours is a nation
weighed down by its citizens' (and government's) debt and bankruptcy debt. National
consumer debt and bankruptcy debt reflects many different factors, so we'll concentrate on
consumer credit debt, which accounts for 50% of the national figure. In
2004, the
national consumer debt reached an all-time high of over 1 trillion dollars. Credit card
debt was just as striking, approximately 642 billion dollars. You can help stop our
national romance with debt and bankruptcy by becoming debt free and learning the skills
necessary to manage your own finances and handle your spending responsibly. Let Done
With Debt help you become debt free.
Other facts:
If you didn't have your credit card payment of $218 a month, and
you instead invested that money in a 12% savings plan, in 25 years you could retire with $1,354,930
in the bank. So your credit card payments not only will cost you thousands in interest,
but also prohibits many Americans from adequately saving for their retirement and makes
bankruptcy look like the only alternative.
The average balance on a credit card
is $7,000.
The average interest rate is 18.9%.
Late fees are now $29.00, (if not received on the
payment due date)
The average household has 10 credit cards.
Almost half the households in America report having
difficulty paying their minimum monthly payments, thus making bankruptcy seem like a good
alternative.
If your credit card balance is $8,000, and you make
the minimum monthly payment at 18% interest, it will take you 25 years, 7 months to pay
the debt off. You will pay $15,432 in interest charges, (almost twice the balance),
bringing your total to $23,432.
Americans paid out approximately $65 billion in
interest last year alone.
Last year over 1.3 million Americans filed for Bankruptcy,
the highest in our nations' history, how's that for debt statistics?
Credit card companies solicit the average American 7 times
a year through the mail.
To calculate your Debt to Income Ratio, divide your debt
by your income. (Ex. A person making $20,000 a year gross income with $10,000
of outstanding debt has a 50% DTI Ratio.) If your Ratio is over 45%, you will be offered
higher interest rates when applying for loans. The lenders will see you as
"overextended".
The typical "Minimum Monthly Payment is 90%
interest and 10% principal.
A pamphlet on "Fair Debt
Collection" is available from the Bureau of Consumer Protection. Call 1-877-382-4357
for your free copy. |
