Knowles System

Credit and Debt Management

Total consumer debt, including home mortgages (over $6.5 trillion), exceeds the cumulative U.S. national debt ($5.7) trillion.
In 1980 credit card debt was only $50 billion. Today, three out of five U.S. households are responsible for approximately $654 billion in outstanding credit card debt. Among these 'revolvers' credit card debt averages $20,000 per household.
Almost 60% of Americans carry 3 or more active credit cards.
Credit Card interest rates can now climb up to 38% depending on the credit worthiness of the consumer.
Late fees have increased 194% since 1993, and now range from $15 - $40.
Last year Americans paid $50 billion in interest and finance charges.
Last year 1.3 million credit card holders declared bankruptcy.
Credit card issuers will jack-up your interest rate to 30% or more if they become aware you have opened a new card account or applied for a car loan or mortgage. The "universal default" business practice, unique to the USA, can send just about any consumer to the penalty box for very insignificant reasons.
Credit card minimum payments are increasing from 1.5% to 4% by the end of 2005.

With the average credit card debt per household of $20,000, at 18% interest rate a 1.5% minimum payment is $300 per month.
At 18% interest rate a 4% minimum payment will be $600 per month.

If we are already living paycheck to paycheck, where are we going to get the extra cash to cover this increase???