Consumers are not being as big sluts with their credit cards as they slowly discover that they have no money. [WSJ]
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*sigh*
Ok, now can we admit that there’s a storm brewing? It only took a small percentage of mortgages to default before the whole housing market started to slide, so I’m guessing that if even 5% of credit card customers either default or stop spending, we could be in for a real treat.
Oh, now the average consumer knows they can’t live on a deficit.
I had to learn this the hard way. I’d been bailed out of CC debt twice by relatives and I never learned. Now I’m about 30k in credit card debt at an average APR of 28%. But I am no longer using them. At all. I’m down from my high of 35k in debt and should be debt free by the end of the year through working my day job, a part-time night job, and doing odd jobs for extra cash.
If I am the typical American then the debt spending is done; however, I think that average Joe-consumer will spend every time they’re given a credit limit increase.
@arniec: you, my friend, are living example of the true damage that “enablers” can have on people.
i like the tag line for the story: Consumers are not being as big sluts with their credit cards as they slowly discover that they have no money
yes!
@forever_knight: like the government. they’re about to shoot 600 bucks his way just because. ‘cept, they dont want him to realize that it’s his own 600 bucks, but its from the future, and eventually he’ll have to pay that back. studying his past spending habits, what do YOU think he’ll do with it?
I personally don’t understand how people could have gotten in this much debt. I can see the housing situation but why exactly would people have thousands of dollars in debt on credit cards?
When do you look at your spending vs your income and say “Hey, I dont need cable TV and the highest speed internet available, nor do I need a new wardrobe since this one should get me through another 6 months”
Impulse buys maybe?
on a totally unrelated note, if someone with a wsj subscription clicks the ‘email this story’ link, you can use the link it says instead of the crappy ’2 paragraphs then buy’ version that we’re currently linked to. maybe consumerist should look into that.
@socalrob: And give up my mink slippers and nightly HD Streaming Philipine Ladyboy Romp? You must be joking!
@RamV10: unfortunately, using the “email this story” function to link to a full version of the copyrighted story is against the terms of use of the WSJ. The “email this story” is for personal use, and they specifically say that web links are to use their copyright and reprint permission system. If consumerist wants to push the limits of “personal use” then let them give it a try… although with the growing amount of free content on WSJ post-murdoch, it may become less of an issue with time.
@socalrob: it’s not all consumer spending. any student will tell you that registrars take credit now to fill that gap between FA & tuition. hospitals/doctors/dentists all accept visa/mc/discover for those co-pays & procedures not covered by insurance. & don’t forget the pharmacist for the $50/pill prescriptions. then there’s the taxman, the oilman, the gasman, the lightman…
contrary to what washington tells you, we are in an inflationary period & lots of people are falling behind. not just b/c they are living beyond their means, but also b/c their means no longer support their standard of living.
of course, the “experts” will tell you that “inflation is controlled” b/c they are excluding two of the most important factors – food & energy, both of which outpaced the rest of the cpi considerably. food increased at its highest rate since 1990 & an energy index that increased almost 30%.
meanwhile, i don’t think i’m even getting a COLA this year, which means i’m losing ground. job hunting time!
@socalrob: I think how people get into thousands of dollars in debt is when they pay only the minimum or an amount much less than the total amount, but still above the minimum each month…and then the rest of it gets interest for the next month, and in the meantime, they don’t quit spending. It’s not like “holy crap, I’m $2,000 in debt, I’ve got to stop using my card for the next X amount of months” it’s like, “I’ve paid my bill, now I need….” and they go through this cycle, over and over.
And I think a lot of people who get into massive debt have high credit limits to begin with, so the minimum payment of a $25,000 credit limit is a lot more than say, a $2,000 credit limit. If you can’t afford the minimum payment on a $2,000 credit limit, you should’ve never been able to get a card in the first place. The minimum for that is like…$10.