Recent Trends of Debt in Our Society
The modern world relies on debt for increased prosperity, but this does not mean that debt does not at the same time threaten prosperity. At the end of the twentieth century and the beginning of the twenty-first century, one form of debt was particularly worrisome to many Americans: credit card debt. Whereas going into debt to buy a house is usually seen as a reasonable way of making a purchase that cannot be made otherwise, credit card debt often results from irresponsible spending on smaller items. In exchange for instant gratification, many Americans sentenced themselves to seemingly never-ending financial burdens and, in some cases, the threat of bankruptcy (an inability to pay debts, which can lead to the seizure of property and other valuable resources).
As of 2007 around 144 million Americans had at least one major credit card, and the average American family had eight different cards. Of the 144 million cardholders only 55 million regularly paid the full balance (the total amount owed) of their credit card bills every month. Nearly 90 million Americans, then, owed not just the amount of their balances to credit card companies but were also paying interest and fees that were often very high. People with poor credit histories (a record of late and missed payments), for instance, might be charged a yearly interest rate of around 30 percent, and the average balance for those who maintained a balance from month to month was estimated at $13,000. Thirty percent interest on a balance of $13,000 would amount to an additional charge of $3,900 a year, not counting additional fees commonly assessed by card companies. Of the 90 million people who habitually failed to pay their monthly balances, approximately 35 million made only the minimum payment of 2 percent of the total balance each month, which amplified the effect of interest and fees and extended the amount of time they would likely remain in debt.
