Credit Card Companies Hold Consumers Responsible

[Feb 13, 2008.]

Some public officials have been saying that credit card companies lure consumers into a debt trap that is difficult to escape. They say that the credit card issuers are being irresponsible in the manner in which they peddle credit.

However, credit card companies are now firing back, saying that, if customers are struggling under a mountain of debt, they are ultimately responsible for their own demise.

Recently, the American Bankers Association issued a document called "Myths vs. Facts: Credit Cards." The study indicated that most consumers are not suffering from debt burnout, and that the majority of credit card customers are not being adversely affected by credit card fees and interest rates.

Still, consumer advocates say that the report minimizes some basic problems within the credit card industry. For instance, they say, the credit card industry makes it too easy for consumers to obtain credit and they fail to sufficiently discourage customers from using cards irresponsibly. According to consumer advocates, it's clear that the level of consumer debt continues to rise while savings rates are declining.

The nation's housing crisis also appears to be having an impact on credit card debt. A number of adjustable rate mortgages are being recalculated this year, meaning that homeowners may be faced with higher interest mortgage payments. With many homeowners struggling to pay their monthly mortgage bills, credit card bills may go unpaid. In addition, with talk of recession becoming ever-present on the airwaves, it appears that 2008 may be a difficult year for consumers.

According to the banking industry, the median credit card balance for families was $2,200 in 2004 - a far smaller amount than some consumers might realize. However, consumer advocates question the accuracy of that figure. They instead point to a Federal Reserve statistic showing that the total credit card debt in the U.S. rose to more than $900 billion in the year 2006.

Julie Ann Amos
Febraury 13th 2008

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