Well, as the economy continues to struggle, spending is declining, and jobs are being cut.  This often causes one to look to credit cards and other forms to survive.  The contradiction comes with the desire of people to eliminate debt in times of struggle.  The additional obligation often causes stresses at dangerous levels.  The desire to save has increased substantially and people with debts are looking for ways to eliminate debt, or atleast to cease its growth.  Some recent statistics that I’ve come across talk of home equity debt growth decreasing from 6% last year to 3% this year.  Mainly because people are not buying homes of course.  As for credit cards though, they continue to grow at about 5.9% as they did a year ago.  I speculate that a year ago, this spending was due to increasing lifestyle while now it is likely due to survival needs (i.e. making other debt payments, basic needs of food, rent, etc.).

An interesting pattern.  Credit Cards are another area of financial concern for banks and individuals.  Attempts have recently been made to create a “bailout” plan for credit card debt forgiveness.  This idea was recently shot down by the treasury department as seen here. What is next for the debt-ridden consumer, for the rest of us?  We must take matters into our own hands as we are the controllers of our life!

Another interesting article posted by the Washington Post explains the moves credit card companies are taking to limit their risks.  This includes slashing available limits, increasing interest rates unexpectedly, eliminating discount offers, and other tactics that, although lowering lender risk, increase borrower risks.  As for borrowers, the likelihood of default is increasing even for the “wealthy,” as can be seen with cards targeting the upper-classes.  These changes increase that likelihood even more.  The effort is to pad the pockets of lenders from expected losses due to the economic struggle but at the cost of borrowers credit files in many cases.  Manageable payments become a trial, fees increase, as do interest rates often trapping some into a cycle that is impossible to break with small minimum payments.   Creating a plan is becoming more and more essential.  Create Plan A and PlanB…

How do you think the government should react to credit card debt?