November 10, 2009
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What To Do With Credit Card Debt, Pt.1
An eye opening experience?Most Americans have had an eye opening experience during the recession. Two years ago, credit was readily accessible and most individuals were able to find good interest rates in a competitive credit card market. Suddenly, the bottom dropped out. Most individuals really didn't see it coming and did nothing to provoke it. Nevertheless, all Americans have had to pay dearly for the negligent and careless behavior of some individuals and many large financial corporations. Another contributing factor was that many consumers were freely swiping their credit cards not having a clear understanding of what they could really afford. Aggressive marketing strategies such as credit card offers promoting low interest rates and inviting reward systems added to this false premise of affordability.
Many consumers learned the hard way when they walked into those inviting credit card traps. Consumers mistakenly perceived these offers as the banks acknowledgement that they were capable of borrowing the money and that they would be responsible in paying them back. The truth is many consumers didn't have the resources or stability to repay the debt. Either they are not aware of what the responsibility of additional debt entails or they are not aware of what they can afford. It is not uncommon for consumers who get themselves in difficult situations, to justify their actions by asking; why did the bank offer me the credit card if I couldn't afford it?
Lenders have been criticized for targeting consumers who are move vulnerable to inviting card offers; particularly university students and young families. On the other hand, lenders say they are only privy to information that shows one part of the picture and that only the consumer can know for sure what he can afford. These lenders say they should not be dictating to consumers how they should be spending their money. Consumer advocates reject this idea and say lenders have a responsibility to regulate who they market credit cards to and say they have been irresponsible in extending credit. Well then, who is to blame for the mess America is in? The general consensus is that it should be shared between consumers and the financial industry.