Twice in one week very strange experiences happened. Something that makes me wonder about the trends of debt in the US. I once wrote that it my CC would have to be pried out from my cold dead hands. I still think that, but I'm wondering if Americans aren't getting worse about CC debt and we shouldn't be forced to take basic money management classes in high school and college?
First we went out to dinner on Friday at a Chinese Restaurant. It was a nice place, pretty reasonable $30 for the two of us. Anyway we were sitting next to this family of 4, who I think were travelling. Anyway they were out of money and had trouble paying for the bill. They began to ask the waiter (who didn't speak english well so we helped to translate), to split the bill on to 3 CC and put down some cash. The cash from was from their two children. The conversation was rather startling, that they could only charge $10 on this card, then $10 on another card, and $10 on another card and $20 in cash. It was very confusing. I thought well maybe they overspent on vacation, but still it was bit surprising.
Then last night I was waiting to pay for my groceries in the express line. It was surprisingly busy, but the woman in front of me couldn't pay for her groceries. She also split a $14.07 bill on to $5 one CC, $5 next CC, and $5 cash. It took forever and the cashier was grumbling a bit because she swiped more than just 2 cards which did not go through before finding cards that worked.
These two experiences were eye-opening. What is going on? I don't recall the last time I saw someone splitting the cost of something on different CC. Or even trying to put things on a CC which was rejected. Personally I rarely notice so I wouldn't know if it were a debit card versus a CC (who can really tell because debit cards are used as CC a lot when you are given a choice). But is abuse of CC getting worse? Are people spending more than they have?
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9 comments:
That would be extremely disturbing...I think people spend a lot more than they make...and it's finally catching up with them...
WAKE UP EVERYONE. IT'S CALLED A RECESSION. WE AIN'T SEEN NOTHING YET.
Technically the recession was in 2000-2002. It is defined as as decline in the GDP for 2 quarters. That happened with the tech boom.
However after 2002 the market started growing like mad 20-30% year.
But the real problem hasn't been the growth, it's really inflation pressure and subprime lending fueling the growth we've experienced with people using their homes like ATMs.
LAL,
Yes, you are correct. But what will happen now, is that money will get tight, people will feel less wealthy (because their homes are worth less, etc) and everything will recede. People will pull back, thus a recession.
Best rul of thumb that I use is to go to Target, Wal Mart and my local supermarket and just look around at everyone. Whatever is going on there is an indicator of the true reality.
I'm very scared about that. I worry that the bust of the housing hasn't hit really hard yet.
Plus I was thinking that people are expecting retirements with pensions are will never happen or will be cut unexpectedly.
Also many people my age are counting on SS, which is absolutely ridiculous. There are so many problems.
But how can we really be debt free if that is how our government runs the country? That is how they lead?
oddly enough I see a lot of prepaid gift cards that are visa/mastercard/discover and a host of others. That might have been one of the issues. those things are annoying since you have to know the exact amount in order to spend them and if you don't you have to sort of guestimate what is in there.
Then again I've seen people get declined over small amounts and they say to me, "oh, I must of charged too much" -doh!
I have those prepaid gift cards, two in fact for $10 each. Bugs the crap out of me. But at least the grocery store multiple cards were used and declined. And the restaurant, they discussed how much space they had on the cards.
It's really difficult for me personally to tell since I was a bill collector for Target. My opinion might be skewed.
I was told that only about 30% of people miss a payment per year, (deliberately miss or forget to send a payment) and of that 30% only 40% carry balances from month to month and of that 5% of those fall more than 30 days past due. I mean it's still a lot of people when you think about how many ppl have credit cards, but probably not as bad as you think.
The average debt of US is $8k. But 25% of US consumers do not have CC. 30% pay of their CC in full, so only 45% of people are even carrying a balance.
That 45% have a balance high enough to make the average $8k. However of that 45%, I believe less than 10% of them have a balance above $10k. That 10% of the 45% population are the people with out of control spending habits.
The 90% of the 45% of CC debtors, owe $2-3k. This was all done in a survey.
So yes it isn't a large part of the population. BUT it's probably growing, and those in that population are running up higher and higher numbers.
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