Ever wonder which is the next crisis which could jeopardize the world's economy.
Well Peter Schiff writing for www.prudentbears.com points out it could very well be the credit card. The US credit card debt now stands at a whopping $957 billion or $3000 per American.(The sub-prime market is $1 trillion in comparison.)
There is a change in the behavior of American consumers. Credit cards earlier were used for unavailable cash and purchases were made over a period of time. But now the credit card is used for availing credit and is used for everyday purchases.
Also now-a-days credit card companies have increased the credit limit and the repayment period. Still what makes it worse is the inflation. Credit card users are just postponing the payments made at higher prices and compounding it with high interest.
Let's just hope that the American consumer repays his debt.
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3 comments:
Its true...
We believe that Americans have more money, but that is not entirely correct. Most Americans have mortgaged their houses and spend most of their lives paying for it. Their cars are the same. By the time they finish paying for it, it's time to buy a new car. Further, a lot of the American economy runs on credit.
Thats true.
In fact a lot of Americans dont think twice before making big-ticket purchases.
Call it risk-taking or plain stupidity.
This was one of the reasons why people with bad credit history thought they could repay the high-interest loans.
The site is www.prudentbear.com
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