Eliminating Excessive Credit Card Debt
For a number of years the utilization of bank cards has been encouraged on various levels in our society. Retailers entice you sign up for credit by offering you an in store discount on your purchases for that day. In other scenarios they offer to give you the satisfaction of the purchase today and the opportunity to delay the payments until later. Creditors encourage the utilization of consumer credit to fund that vacation or to pay for the kids braces.
The ease and versatility offered by the credit card industry made these propositions very attractive indeed. Many consumers have experienced the tremendous benefits of easy credit. There is however a down side to this scenario that comes in the form of excessive consumer debt. As a matter of fact recent studies based on a 2010 report by the Federal Reserve indicate that the average balance owed by consumers is nearly $14,500. When you study these numbers over the years, these outstanding balance numbers have been steadily growing.
There are two basic directions from which the issue of excessive credit card debt can be handled. At an industry level, greater consumer education needs to take place in regards to the proper handling of consumer credit. While education can raise the public understanding the issues, the response of the industry must go even deeper. One answer would be stiffer approval standards for would be credit card holders. This might include things like pre-requisite financial management and budgeting courses. Another solution could be the development of truly "personal" lines of credit. While most credit lines have product based limits, this type of arrangement would set limits based exclusively upon the demonstrated creditworthiness and stability of the borrower. Once a card is issued lenders should be looking to implement early warning standards based on the spending habits, usage and payment history of the borrower. When the patterns exhibited by a borrower indicate the potential for accumulating excessive debt, the company would then restrict the account and require further education and demonstrated stability to reopen the credit line.
The second method of dealing with excessive credit card debt takes place on an individual level. A borrower needs to have a household budget set up before ever using consumer credit. This budget will allow the borrower to know their cash flow position each month and quickly ascertain whether they are getting too deep into debt. Ideally, the borrower would want to set up their household budget to ensure that, that they can pay off their outstanding credit card balance each month. Developing discipline is vital if a borrower is going to stay clear of the difficulty created by having excessive levels of consumer debt.
For individuals already overwhelmed by runaway credit card debt there are debt management options available. These could include such?resources? as credit card litigation or consumer credit counseling.
The ease and versatility offered by the credit card industry made these propositions very attractive indeed. Many consumers have experienced the tremendous benefits of easy credit. There is however a down side to this scenario that comes in the form of excessive consumer debt. As a matter of fact recent studies based on a 2010 report by the Federal Reserve indicate that the average balance owed by consumers is nearly $14,500. When you study these numbers over the years, these outstanding balance numbers have been steadily growing.
There are two basic directions from which the issue of excessive credit card debt can be handled. At an industry level, greater consumer education needs to take place in regards to the proper handling of consumer credit. While education can raise the public understanding the issues, the response of the industry must go even deeper. One answer would be stiffer approval standards for would be credit card holders. This might include things like pre-requisite financial management and budgeting courses. Another solution could be the development of truly "personal" lines of credit. While most credit lines have product based limits, this type of arrangement would set limits based exclusively upon the demonstrated creditworthiness and stability of the borrower. Once a card is issued lenders should be looking to implement early warning standards based on the spending habits, usage and payment history of the borrower. When the patterns exhibited by a borrower indicate the potential for accumulating excessive debt, the company would then restrict the account and require further education and demonstrated stability to reopen the credit line.
The second method of dealing with excessive credit card debt takes place on an individual level. A borrower needs to have a household budget set up before ever using consumer credit. This budget will allow the borrower to know their cash flow position each month and quickly ascertain whether they are getting too deep into debt. Ideally, the borrower would want to set up their household budget to ensure that, that they can pay off their outstanding credit card balance each month. Developing discipline is vital if a borrower is going to stay clear of the difficulty created by having excessive levels of consumer debt.
For individuals already overwhelmed by runaway credit card debt there are debt management options available. These could include such?resources? as credit card litigation or consumer credit counseling.