Applying for a Credit Card? Some Points to Ponder

Credit cards can seem -to some – an answer to their prayers. But the truth is, if you can’t manage your personal finances to begin with, credit cards will get you into greater debt and cause more problems than they solve.

A few points on credit card debt:

• Credit card debt has increased significantly in the past decade. Credit card debt has increased by 25 percent in the past 10 years, and reached $963B in January 2009.
• More than three-quarters of families have credit cards and close to half carry a balance. Seventy-eight percent of U.S. families have a credit card, and 44 percent of families carried a balance on their credit card.
• Families carry significant credit card debt. The average amount of credit card debt among families with a balance was $7,300 in 2007 (the median was $3,000).
• Delinquency rates have increased by more than a third since the end of 2006. The number of accounts more than 30 days late has increased from 3.9% in the fourth quarter of 2006, to 5.6% in the fourth quarter of 2008. 
• Credit card fees and interest rates are extremely high: Issuers collect $15B annually in penalty fees. Penalty fees on credit cards are around $15 billion annually, an estimated 10 percent of total credit card industry revenues.
• One-fifth of those carrying credit card debt pay an interest rate above 20 percent. Ninety-percent of issuers assessed variable rate cards and an estimated one-fifth were charged interest rates above 20 percent.

Quite sobering.  Still interested in applying?

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