Reasons for Debt
Borrowing habits in the US are escalating into what appears to be a debt crisis! The amounts of debt that are delinquent - when the minimum payments are late - are increasing. In 2007, almost $18.1 billion was paid in penalty fees to credit card companies due to late payments, up by more than 50% in 2003 [Source: Hoffman Brinker & Roberts]. Charge-offs or accounts closed due to non payment of debts are also growing and are expected to keep rising in 2008.
The reasons for debt are often a result of circumstances beyond a person’s control. These could include illness, unemployment, poor money management and divorce.
The ‘buy now, pay later’ mentality pushed on consumers by credit card companies has succeeded in making that philosophy a major reason why people are in debt. The average American household’s credit card debts in 1990 was $2,966. In 2007, it had grown by over 330% to $9,840 [Source: Hoffman Brinker & Roberts]. With the economy slowing down, many consumers are finding it difficult to make their monthly payments and many others tend to pay only the minimum amount. In the long run, no payments and late payments severely damage one’s credit score.
Many people find themselves weighed down with bad debt by making common mistakes when it comes to handling their bills and credit payments. Understanding, anticipating and wanting to correct the reasons for your debt are the first steps towards a debt free life. At , we aim to assist anyone struggling in debt. If you have been recently laid off, been ill, or just have poor money management skills, our specially trained counsellors are always available online or on our toll free number.
