The Federal Reserve reported on January 8, 2008 that credit card borrowing is at its highest level in six months, reflecting that borrowers are relying more heavily on credit card debt to finalize purchases since the availability of equity loans has tighten.

They also reported that nearly one of four consumers has no credit cards–skewed heavily toward younger consumers with 38% of 18-24-year olds indicating they do not have a credit card.

A survey of 55,000 consumers last year by CardTrak.com found that the average debt load carried by households is $9,900. A separate poll by Gallup and the credit rating agency Experian found that about 11% of cardholders usually make only the minimum payment each month.

While is one reason why Sen. Dianne Feinstein (D-Calif.) introduced legislation last week to protect consumers from the prospect of financial ruin because of the ubiquitous problem–the danger of making only minimum payments on credit card bills.

The bill,S.2542, would require credit card issuers to clearly warn consumers about the pitfalls of making only minimum payments on their outstanding balances. It also would require lenders to inform people about howw long they’ll be on the hook, and how much they’ll have to shell out in interest, if they pay less than they owe each month.

Credit card debt awareness goes along with the mortgage subprime problems…both are examples of lenders making it all too easy for people to get into financial situations they aren’t prepared to deal with.

However I wonder if it’s really an awareness issue or more that of a belief that one’s economic situation (greater earnings) will improve over time, enabling one to cover their obligations.

What do you think? Let us know in the comments section following this article.

This entry was posted on Wednesday, January 30th, 2008 at 10:11 am and is filed under From The Street. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.