The beginning of summer is often marked by festive graduation ceremonies across the country. For many high school seniors, this marks the end of one chapter of their life and the beginning of their undergraduate days in a few short months. College orientation used to be marked by new friends, new freedom and often a plethora of credit card companies looking to sign up unsuspecting freshmen.
In today's economic climate, money troubles affect everyone in multiple ways. Though lost wages and foreclosed homes have dominated headlines for years, credit card debt is and remains a financial issue for many Americans. A recent report showed just how bad credit card debt and credit card delinquency is in some states.
The struggling U.S. economy brings financial challenges to the homes of many Birmingham residents. Jobs are hard to find, salaries are cut and hours are reduced. As people's income is limited, it frequently becomes harder to deal with unexpected hardships, like medical emergencies, urgent home maintenance or a car in need of repair. Many people accumulate credit card debt during these times, fully expecting to pay it off when their finances improve. Unfortunately, this is not always as easy as it sounds.
It is often very difficult for many of Alabama's families to steer clear of mounting debt. Unfortunately, with the passage of time, credit card debt can multiply to the point where it may appear to be insurmountable.
Credit card debt is a mounting problem for many Birmingham residents, including college students. Recent figures show that college students are taking on credit card debt at an alarming rate. In fact, the average undergraduate now has $2,500 in credit card debt. Once they graduate from college, former students are often unable to make even the minimum payments.
Household debt in the United States has declined since the height of the bubble that preceded the Great Recession. The total debt owed by American households now stands at about $11.4 trillion, which is still a very big number. By far the biggest component of this debt is mortgage debt, including debt from home-equity loans, which totals $8.7 trillion. Credit card debt, in comparison, totals significantly less: $672 billion. The total credit card debt is less than that for automobile loans, which total $750 billion, and student loans, which total $914 billion.
Credit cards and financial challenges can create problems for individuals and families as we have seen in our economy since 2008. Creditors are more cautious than normal when extending credit because of the troubles our economy has seen with credit card debt.
Credit scores, which are generated on credit reports, can have a substantial impact on a person's future ability to get loans or mortgages. As such, the process of getting an auto loan or home mortgage can be complicated; if not impossible in some cases. Financial challenges can also lead to repossession of assets or bankruptcy.
Debt is inevitable for every family in some way. Whether it is student loan, a mortgage or credit card debt, the high majority of Americans have some sort of debt. Despite the many benefits of credit cards, the financial challenges most recently experienced by Americans have led to an increased number of bankruptcies. However, delinquent payments can cause creditors to start calling or legal action in order to collect payment.
Financial challenges are not considered a new concept conundrum in today's economy among many Alabama families. With increasing unemployment, which in turn decreases income, families across the country have had to work through hard times.