Problem

Credit card debt

Nature:

Credit card debt is an example of unsecured consumer debt, accessed through credit cards.

Debt results when a client of a credit card company purchases an item or service through the card system. Debt accumulates and increases via interest and penalties when the consumer does not pay the company for the money he or she has spent.

The results of not paying this debt on time are that the company will charge a late payment penalty (generally in the US from $10 to $40) and report the late payment to credit rating agencies. Being late on a payment is sometimes referred to as being in "default". The late payment penalty itself increases the amount of debt the consumer has.

When a consumer has been late on a payment, it is possible that other creditors, even creditors the consumer was not late in paying, may increase the interest rates the consumer is paying. This practice is called universal default.

Research shows that people with credit card debt are more likely to forgo needed medical care than others, and 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
Subject(s):
Date of last update
14.11.2016 – 07:41 CET