The economy chugs along with consumers going into deep credit card debt: Credit card debt surges in top 25 US metro areas according to Equifax data.
My Budget 360
Credit card debt is like crack for the American consumer. A cheap alternative to pure spending cocaine but enough to keep you on the hamster wheel of consumption. I recently discussed how credit card debt while remaining subdued since the Great Recession suddenly made a 180 degree turn. Americans are spending money they don’t have on shiny plastic. Total outstanding credit card debt recently surged beyond the $900 billion mark. That is a lot of consuming. And with the average nationwide interest rate of 14% that means spending hamsters are probably dropping tens of billions on interest costs alone. I found it interesting that I got a few e-mails proselytizing how great credit cards were after my last piece. My reaction: So you enjoy locking in future earnings for money you don’t have today? Keep in mind people pray to the hedge fund gods for a 7% annual return. Getting a 14% return is like finding El Dorado had a sister name AmEx. It is amazing to get a 14% return (and with some cards, you are getting close to usury). Equifax released credit card data on 25 US metro areas and the results are startling.
Spending like you don’t have money
Credit cards do have a purpose in our society. Yet most people don’t realize that buying a $1,000 TV at 14% interest and paying the minimum can easily turn that TV into a $2,000 or $3,000 purchase. And many people do this while obviously neglecting retirement savings. How do we know this? Because half of retirees rely on Social Security as their primary source of income and would be out on the streets living under a bridge if it were not for Social Security. Credit card debt is like junk food. Easily accessible, easy to use, but hard to work off. We all know junk food is bad but most of the country is overweight. We know credit card debt is dangerous yet people go into deep debt on a continual basis.
First, take a look at the Equifax data:
http://www.mybudget360.com/credit-card-debt-economy-equifax-credit-card-debt-us-cities/