| Debt Entanglement in the USA |
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| Friday, 18 June 2010 08:28 |
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The United States used to be a cash society, but since the 1950’s it has transformed to a consumer society. This transformation has lead to the widespread use of consumer credit, which is necessary to sustain the large-scale production of consumer goods. In the competition to lend money to people seeking credit, companies started to grant more loans to people from low-income households. In 2004, 40 million U.S. households earned $30,000 a year or less. Yet the total debt held by these families was nearly $700 billion, exceeding their total income of $650 billion. These conditions have helped give rise to debt entanglement, in which individuals and/or families experience great difficulty getting out of debt, especially if they can only afford to make the minimum payments. In addition to people who are sued by their creditors for defaulting, more than 10 million workers in the U.S. have their wages garnished to meet their unpaid debts.
Credit Card Quick Fact: Did you know that as many as 1 in 7 Americans carry 10 or more credit cards? |
JPIC Corner June 2010
Did You Know?
Every year, more than 10 million U.S. workers have their wages garnished to meet their unpaid debts.
In 2009, US consumers had nearly 2.5 trillion dollars in debt, $894 billion of which was in revolving credit (such as credit cards).
In 2004, US families with incomes less than $30,000 owed nearly $700 billion in debt, exceeding their total income of $650 billion.
Although recently credit card balances are decreasing, they have been increasing significantly for years. Between 1997 and 2007, the USA’s credit card debt balances increased 75%
Around 43% of American families spend more than they make each year.