Are Card Companies Responsible For Escalating Credit Card Debt?

It is easy to understand how for many, credit card debt have become an unimaginable nightmare. It was not so long ago that consumer confidence was high and it was a case of 'spend, spend, spend'. For many people, this meant owning, - not one, not two but three or more creditcards, while for others, holding even a small credit debt was a necessity rather than a luxury.

The overwhelming demand for credit cards was of course good news for the credit card companies who grew from strength to strength on credit consumers' love affair with credit cards. However, both the credit card industry and credit card users are now faced with a huge problem called ‘Credit Card Debt’.

Despite the murmurs, what credit card consumers perhaps did not foresee was the speed of the downturn in a rapidly changing economic climate that would have far reaching repercussions on the use and repayment of a readily available line of credit. Many credit card consumers now feel lumbered by credit card debts on a scale they might well feel unable to repay.

To make matters worse, numerous credit card companies have now clamped down. Some have tightened their lending criteria; withdrawn previously abundant supply of 0% - low interest cards; made substantial rate rises and/or increased their rejection rate of new credit card applications....Perhaps not too soon. But is it a case of 'closing the stable door after the horse has bolted?'

In an interview with the Financial Times, Alan Duncan, shadow business secretary, severely criticised the credit card industry. He accused it of 'corporate irresponsibility in seducing consumers into debt, by offering 0% interest for short periods on purchases and debts transferred from other cards.

Mr Duncan further warned about the practice of 'enticing vulnerable consumers into debt which, if they had to pay interest they couldn't possibly afford, yet abandoned if unable to meet repayments'. However, is this not also the case of 'too little too late?'

Many credit card consumers have already found themselves unable to continue meeting even the required minimum payments. The reality for them will continue to worsen, since interest charged on the debt balance each month will be at a much higher rate than those on other kind of loans, further compounding the existing credit card debt.

As a consequence, many people are now feeling the effects of not having kept a careful eye on their credit card spending. Because they lost control while experiencing difficulty with meeting payments, what was once a small credit debt has now escalated and they now find that they are caught up in the vicious circle of credit card debt.



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