Credit Card Delinquencies Reach New Highs
According to Money.com, not only is personal credit card use on the rise, but Trans Union, one of 3 major credit reporting bureaus, reported that delinquencies are up 11% from last year. In other words, people are not paying their bills and the credit card companies are feeling the brunt of it. This is all likely a result of the economic pressures people are feeling from job loss, the housing decline, and recession woes as a whole.
Families are faced with making touch decisions, and the credit card payment is usually the last bill to be paid. More and more people are finding that they have to stretch their dollar in order to make ends meet and at the end of the month there just isn’t enough money left.
Interestingly, the states that are suffering from the highest delinquencies are Nevada, Florida and Arizona. These just happen to be the areas that saw the largest increase in housing prices during the real estate boom and consequently are suffering from being hit the hardest during the mortgage crisis.
Unfortunately thes worst is not over just quite yet. TransUnion stated that they expect things to get worse in the next quarter of the year. Of course that will all depend on if unemployment takes a turn for the better and how these new credit card regulations and laws will affect consumers.
All and all, there is a growing concern that consumers need to be better educated about the use of credit and the ramifications for not being able to afford what they charge. There has been a long standing acceptance of using plastic as an alternative or supplement to income and a “I’ll pay for it later,” mentality. This belief system is starting to catch up with consumers, but unfortunately the pain does not end with the individual who can’t pay their bills.
In the end, the consumer gets a bad mark on their credit score, renegotiates the debt or files for personal bankruptcy. All of which provides a way out for the individuals but always leaves the credit companies left with the debt. It’s a risky business that seems as if it is not turning out not to be so profitable anymore, and stricter regulations may solve those issues for both parties.
In: Personal Finance · Tagged with: credit card debt, credit score, interest rates