Posted by DebtKid :: July 25, 2007 @ 12:20 pmGood or bad, in America we love easy credit. And nothing is easier than swiping that handy piece of plastic for everything under the sun.
The latest consumer borrowing numbers for May came in well over industry expectations, due largely to a sharp increase in consumer credit card use.
What’s going on?
For the past few years, the home has been the giant credit card for many Americans. With home equity tapped out, consumers seem to be turning to the next easiest alternative, credit cards.
We all saw this coming. The housing bubble had to crash sometime. It’s had an affect on the overall economy, though economists are predicting higher GDP numbers for the second quarter due to strong employment numbers and stable consumer spending (got to put those credit cards to good use, right?).
Never ending cycle
The problem is that if we don’t address our addiction to credit cards (now that the housing addiction is fading in many markets) at some point, we really will be truly tapped out.
Getting out of debt isn’t easy, trust me, I know. I’m trying to do it myself. But there are better alternatives to swiping that credit card for every purchase you need to make. And speaking of purchases, have you looked at where your money is going lately? I was shocked to learn my spending habits varied greatly from what I thought, once I took the time to sit down and go through my bank statements. As I mentioned in a previous post, you’ll be surprised to see where your money is really going if you just take time to analyze your spending.
Are you stuck in the credit purchase jungle? Maybe it’s time to consolidate your high-interest credit cards with a P2P loan on Lending Club, so that someday you can be a lender and not just a borrower!
3 Comments
To see some documentary style video on the US credit card crunch. Check out the movie Maxed Out. It's in the style of Super Size Me. It's amazing how leveraged the US is as a country and how much we really overspend using easy credit and credit cards.
I am not comfortable with the underlying theme of not using credit cards, however I appreciate your statement that using credit cards can be an addiction. This is likened to the easy money a gambler thinks he will get by betting on that longshot instead of paying rent. Or the drug dealer's easy money he would get spending the day on a street corner instead of spending 8 hours working. Credit Cards are a way of life but can also be used as a way to enhance your quality of life.
You have to remember credit cards will hurt you if abused. Living beyond your means is not a wise decision. However, purchasing items with a credit card offers you a level of protection you can not get anywhere else. Buying that big screen TV with some credit cards gives you a warranty enhancement debit cards and checks do not give.
Of course pulling out the plastic for a $5000 TV when you have $500 in the bank is not what I call wise consumer spending. If you spend like that then refinancing won't even help you. You need to change your lifestyle before you change your interest rates!!
It is hard not to overspend in the society that demands to spend as much money as possible. Everyday you hear everywhere - buy now everything you want and pay later. But nobody awares you, that it leads to deep debts... But I think soon we will hear an unanimous call not to spend but to save money.
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