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"It is high time for the American consumers to wake up and stop believing in the magic of easy credit before it is too late. Their upgraded lifestyle is a bubble of an illusion that will burst soon enough." - Alex Deluce.
What say you?
http://www.goldtelegraph.com/debt-on-track-to-destroy-the-american-middle-class/
@Anonymouswrote:
What say you?
http://www.goldtelegraph.com/debt-on-track-to-destroy-the-american-middle-class/
I say he's full of it. I've been hearing "the sky is falling!" predictions for years. Sticks hand out the window - nope, the sky is still up there.
The biggest problem is that consumers are trying to pay off credit cards in the wrong way. Only 51.5% consumers allocate their excess money to the card with highest APR. People are not analyzing interest rates at all. Only 10% consumers make extra payments on the high-interest card.
The mortgage industry is also not good. Something like subprime mortgage crisis may also hit the country in the future.
@Anonymouswrote:The biggest problem is that consumers are trying to pay off credit cards in the wrong way. Only 51.5% consumers allocate their excess money to the card with highest APR. People are not analyzing interest rates at all. Only 10% consumers make extra payments on the high-interest card.
The mortgage industry is also not good. Something like subprime mortgage crisis may also hit the country in the future.
While mathmatically what you say has merit, paying off the highest APR first does allow you to pay off everything faster and with less money paid, there are other considerations to make. For example, if someone needs to apply for a mortgage, they need to concentrate on their scores and their debt to income ratios. Leaving a high APR revolving balance to focus on installment debt or a high utilization revolving account would give more immediate benefits.
There is no black/white right/wrong way. It all depends upon the goal.
Interesting thoughts, all.
The website is 'goldtelegraph.com'? Never heard of it.
Credit card debt ebbs and flows over the years. In general, I think the trend is more concerning but with a relatively strong economy over the past 8 years or so, it seems like we are due for more credit problems vs less. At some point the market is going to turn for a while (and more than just a correction).