Credit Basics
Consolidated: Household debt grew 10.4% in '03
Americans think living on credit and carrying large
debts are making their lives
miserable, a survey by Consolidated Credit Counseling Services said.
The Fort Lauderdale nonprofit said
in its online survey of 5,000 people, 63 percent of participants said debt is making
their home lives unhappy and 43 percent said they have a debt-to-income ratio of
50 percent or more.
Consolidated Credit, which helps people with debt
and money management issues, said household debt grew 10.4 percent in 2003, the
biggest increase since 1987.
Net savings in the economy, the group said, fell
38 percent to $155.5 billion.
"Our money mindset has changed," said Howard Dvorkin,
Consolidated Credit president. "The old American values are fading away as the depression
era generation ceases to exist."
Among the other findings in its survey, Consolidated
Credit said, are:
- 58 percent of respondents said their credit cards are at or near their maximum credit limits
- 62 percent said they do not have a savings account
- 92 percent said they don't have a three-month emergency fund
- 37 percent said they took cash advances from one card to make payments on another credit card
- 59 percent said they only pay the minimum amount due on credit cards each month
"In our instant society, people don't want to wait for anything, and credit enables
that immediate indulgence," Dvorkin said. "People need to realize that it will cost
them. Pleasure now, pay later. A lot more later, if you are not careful."
Consolidated Credit said its experts believe people assume they are doing well if
they can afford the monthly minimum payments. The group said this is both untrue
and a major problem.
"One life event sends many people into financial hardship, and
then they can't afford
to make their minimum payments," the nonprofit said.
Dvorkin said warning signs of credit problems include:
- Having to apply for a new credit card because the others are maxed out,
- Having to take cash advances from credit cards to pay bills, and
- Allocating an increasing amount of income to paying debts.
