Dec 23, 2007 11:44 pm US/Eastern
Credit Card Debt Getting Out Of Control
BALTIMORE (WJZ) ―
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Some startling new numbers indicate credit card spending may be getting out of control.
Just one day left for those last minute holiday shoppers, and if you're one of them, you may want to wait before you whip out your wallet.
There are some startling new numbers that indicate credit card spending may be getting out of control.
Derek Valcourt reports, some say the numbers are a sign of a looming economic crisis.
The problem is too many Americans are falling behind on their credit card payment, and many agree the numbers are about to get a lot worse.
When the going gets tough, the tough tighten their purse strings, but some are racking up debt.
According to the consumer Federation of America, on average each of us spends $1,000 during the holiday season, and a whopping 75 percent of that is paid for with credit cards.
In all, the Federal Reserve estimates that Americans owe some $920 million in credit card debt, and that wouldn't be a problem if we could pay it.
A review of financial information from several of the country's biggest credit card companies by the Associated Press found that in the last year, the value of credit card debt more than 30 days late has jumped 26 percent to over $17.3 billion.
The number of accounts in default and the number of accounts more than 90 days late has also risen sharply.
"I think it's clear now that consumers are facing some economic challenges out there," sid CornScore Inc Chairman Gian Fulgoni.
Some economist believe this credit crunch is the result of the subprime mortgage crisis.
Too many people with low teaser rate mortgages that are now expiring leaving many homeowners to rely on credit cards to help them through the crunch.
Earlier this week the president signed the Mortgage Forgiveness Debt Relief Act.
"Like many Americans, I'm concerned. And I'm concerned about the fact that Americans see their costs going up. I know Americans are concerned about whether or not their neighbor may stay in their house. And so we are dealing with these issues," said President Bush.
According to the Federal Reserve Bank, 40 percent of American families spen more than they earn.
U.S. households are projected to receive approximately 5.3 billion offers for new credit cards by the end of this year.
(© MMIX, CBS Broadcasting Inc. All Rights Reserved.)
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