Credit Card Debt Getting Trickier With Current Economic Situation

Credit Card Debt Getting Trickier With Current Economic Situation

The new request that the banking industry is posing to Congress will cost the average American household $230 per year according to Economist Robert Shapiro. Even though the price tag may not be staggering, haven't your tax dollars done enough to help this limping, crippled industry? Haven't you paid enough in interest and fees on your old debts?

It's interesting that fees came up...because that's exactly what's at the heart of the new argument. Many people don't realize that every time you use a debit or credit card, a small fee has to be paid. In order to cut back on that fee going towards debit swipes, banks are requesting to put either $50 or $100 cap on debit card purchases. This means that to spend more than a particular amount, consumers would have to either have cash handy or use their credit card. Banks are hoping for the latter, because when customers use credit cards not only do banks still get to charge those same fees, but later on down the road they also get to charge interest rates - which are now averaging around 18% in America. So for every $100 you'd like to spend, you can now add in an additional $18. It adds up swiftly.

Just imagine how much more you'd use your credit card also, if the debit card was simply not an option for items worth more than a certain amount. Sure, this may not be a big deal to some people. If you don't have any credit card debt, this is simply an afterthought: "I can just pay my balances each month and never have to worry about interest." If you're one of the lucky few who can afford this attitude, count your blessings. Many aren't so fortunate.

In fact, the average American household has around $30,000 in debt. Most families, especially with the slumping job market and mortgage securities meltdown, only make minimum payments each month as it is. These payments do hardly anything towards reducing the balance - they tend to only cover fees and interest rates...and the debt doesn't shrink.

It's easy to see that it's more important than ever to take care of credit card debt before you and your family add to the list of those who are snowballed by their debt, never to escape. After all, won't your children have enough problems in life without inheriting our credit card debt? That's right; credit card debt is a legal portion of your estate, passed along to your next of kin after death. Scary thought?

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