The Credit Card See-Saw

A hot item in the news lately cited that deep-in-debt Americans have been bucking trends by actually paying larger portions of their monthly credit card bills. It was a rare positive note in the world of consumer credit debt, but the trend is not expected to last. Credit card companies have responded to declining profits in the last quarter by raising interest rates and fees. Combined with the Fed having raised rates again at the beginning of June, this increases stand to greatly affect the bill-paying public in a detrimental way. With income levels remaining stagnant, the see-saw between credit card companies and consumers is tilting towards the former in a big way… poised to slide incautious consumers into bankruptcy.

Two ways that some people have combated escalating credit card debt in the current atmosphere are consolidating multiple debts into one low-rate card, and/or paying off their debts entirely by taking out home equity lines of credit. However, with unilateral rate hikes and the housing boom finally declining, the boons of these options may not be the same as in the recent past. It will be interesting to see if the ever-burgeoning issue of American credit card debt continues to grow with a steady dependence on credit cards with ballooning credit card rates and fees. ■