ABA: Credit card debt increases
Unemployment may be tied to recent credit card debt statistics from the American Bankers Association (ABA).
A report from the ABA shows that delinquent credit cards made up 4.75 percent of all credit card accounts during the first quarter of 2009, which represented a rise of 23 basis points from the previous quarter.
ABA Chief Economist James Chessen said people may be using their credit cards more as a result of the rise in unemployment. The situation for all types of late debt will not get better until Americans can find work.
“Delinquencies won’t improve until companies start hiring again and we see a significant economic turnaround,” Chessen said.
Balances on delinquent accounts saw a large increase over the first quarter. Climbing 108 basis points, those balances represented 6.6 percent of overall credit card debt.
The other problem is that using credit cards to make ends meet became a part of everyday American life and now with unemployment at a high, people can’t afford even the minimum payments on their credit cards. Policymakers have recognized the full context of the economic forces hitting the average household today, and have taken innovative steps to provide stability and opportunity to all families, hopefully these changes have not come not too late.
The unemployment rate doesn’t seem to be improving through the third quarter of this year. According to the U.S. Bureau of Labor Statistics, 14.7 million people, or 9.5 percent of the working population, are unemployed.