Consumer Credit Card Debt Approaches 1 Trillion Dollars.

As if the current credit crisis wasn’t enough, Americans are turning toward what I like to call unconventional financing more and more these days.  Just 12 short years ago in 1996, Americans were only in 500 billion dollars worth of credit card debt.  Now, only 12 years later, we have doubled that number with an additional 500 billion dollars in debt.

The most exciting part of this story for me is that no-one is concerned about this.  The federal government is not considering any legislation that would limit the amount of credit card debt that someone can get into.  They are doing nothing about the credit card industry’s practices.

Why, because most of our elected officials receive campaign contributions and various other perks, some we know about and some we don’t.

What do you compare 1 trillion dollars to?  Let’s think about it for one minute.  If we Americans stopped using credit cards today and started paying off our debt at a small amount of $100,000,000.00 per day to Visa, Mastercard, Capital One, Discover, and American Express, and let’s assume that they let us off the hook for all interest payments after today (yea right).  We would be paying off the debt for  approximately 25 years.  I would calculate the number exactly, but my trusty calculater that I have had since I cannot remember doesn’t calculate numbers that high.  If we bump up our minimum daily payment by $400,000,000.00 to Half a Billion a Day, we can significantly cut down the debt to approximately 6 or 7 years.   Well, at least we have a goal to shoot for now.  At $1,000,000,000.00 per day, we can have this debt paid off in less than 3 years.  Wow, I thought we had a problem, but now I see that this is a very sustainable goal.  Oh wait, we don’t have a billion dollars a day to pay this back, and the credit card companies still want their 30% interest rates.  Well, how do they expect us to pay this debt back?  Simply put, they don’t.  They don’t want you to pay it back.  They want to keep us in indentured servitude to them and their shareholders.  Let’s not forget, Senators and Congressmen don’t come cheap these days.

Right now H.R. 5244 is moving through the legislative process.  It is known as the Credit Cardholders Bill of Rights.  This Bill is designed to prevent unfair and deceptive practices.  I wonder why our elected officials haven’t thougth of this before we were in 1 trillion dollars worth of debt.  This Bill, if passed in the present form, would prevent aggressive marketing, raising rates on people who pay their balances and reduce fees on credit cards.  Obviously, this Bill is being opposed by some of our elected officials and the credit card industry.  Do you find that shocking?

This Bill, if it ever gets enacted into law will, in my opinion, never make in through the process in its current form.  It will be watered down and re-written until it has little or no teeth.  Although this is a real opportunity to make some real changes in the industry, I am of the opinion that our elected officials will drop the ball again, as they do routinely.  Ask yourself, why haven’t the proposals for mortgage reform been enacted into law.  They were proposed over a year ago.

We will keep an eye on this one.