A Nation in Debt

America is a nation in debt. We love to buy and the mass marketers spend millions every year trying to convince us that we need the newest, biggest, and best of whatever it is. They guilt us at Christmas into “keeping the retailers happy". But in the end, not everyone can pay all that debt off.

Studies show the average consumer is exposed to more than 3,000 marketing messages every day. In the last decade, it's been estimated, solicitations jumped from 1.52 billion annually to 4.29 billion.

The credit card companies really don’t care if you ever pay off your cards. In fact, they prefer you don’t. They make billions, yes with a “B” every year on interest. Last year, the credit industry made $43 billion in interest. If you pay that debt off, their income goes away.

Late last year, revolving debt — an estimated 95 percent of it from credit cards — reached a record high of $943.5 billion, according to the Federal Reserve. The annual growth rate of this debt increased steadily in 2007, reaching 9.3 percent in the last quarter, up from 5.4 percent in the first quarter.

The amount of debt that is delinquent — in which minimum payments are late but the accounts are still open — also appears to be on the rise. The Federal Reserve found that 4.34 percent of the credit card portfolios of the 100 largest banks that issue cards was delinquent in the third quarter of last year, up from 4.07 percent in the previous quarter. Charge-offs — accounts closed for nonpayment — also grew in that period, and banks expect charge offs to continue rising in 2008.