Problem

Credit card debt

Nature:

Credit card debt results when a client of a credit card company purchases an item or service through the card system. Debt grows through the accrual of interest and penalties when the consumer fails to repay the company for the money they have spent.

If the debt is not paid on time, the company will charge a late-payment penalty and report the late payment to credit rating agencies. Late payment is sometimes referred to as "default". The late-payment penalty increases the customer's total debt.

A customer's interest rate may be significantly increased as a result of them missing multiple payments. The penalty Annual percentage rate (APR) varies between card-issuing companies and is usually disclosed in literature at the time of a credit card application, and also on a paper notification that is sent with the credit card to the customer's residence.

Research shows people with credit card debt are more likely than others to forgo medical care than others and that the likelihood of forgone medical care increases with the magnitude of credit card debt.

Incidence:
In what they term the "democratization of credit," credit card companies in 1998 extended over US $2.5 trillion in debt. Americans' personal credit card debt level has increased to over half a trillion dollars in 1998. By the turn of the 20th century, around 60 percent of all Americans carry some credit card debt.
Broader Problems:
Personal debt
Aggravates:
Demoralization
Problem Type:
G: Very specific problems
Date of last update
04.10.2020 – 22:48 CEST