While it is a well known fact that credit cards can provide many people with ease, convenient and flexibility when it comes to making purchases, many people have also fallen victim to the pitfalls of credit card use. There has been a lot of concern over rising credit card debt in the United States and according to a recent report many Americans simply haven’t learnt any lessons from the financial crisis that took hold a few years ago.
According to recent figures, credit card debt in the United States is set to reach a trillion dollars for the first time in history. The data shows that in the final quarter of 2015, Americans amassed more credit card debt than during the years of 2009-2011. With credit cards considered one of the most expensive forms of borrowing, beaten only by payday loans, officials are concerned about the fact that many people continue to make the same mistakes over and over again when it comes to borrowing and spending.
Posing dangers for consumers
The spending and repayment habits of some credit card users is putting them in danger of severe financial difficulties according to experts. Officials have said that credit cards can prove hugely useful to those who use them wisely and repay the balance off in full each month. However, they also pointed out that many people are spending frivolously on the plastic and then repaying the balance in small amounts over a long period of time, which means that they are hit with extortionate interest rates as well as fees and penalties for late or missed payments.
A study from CardHub.com suggests that there was a rise of $71 billion in credit card debt last year, which takes the total amount of credit card debt to $917.7 billion. The data also showed that the majority of credit card debt that was amassed last year was during the final three months of the year. During that period card debt increased by over $52 billion. An official involved in the research said that the figures showed consumers were returning to the bad habits that they had prior to the economic downturn.
The group also said that Americans hadn’t been as lax with credit card spending since the 2008 recession. Many had believed that consumers would learn tough but valuable lessons with regards to finances from the economic downturn but experts said that these lessons appeared to have been short lived based on these figures.